Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 30, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | CareView Communications Inc | ||
Entity Central Index Key | 0001377149 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-54090 | ||
Entity Incorporation, State Code | NV | ||
Entity Well-known Season Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Reporting Status Current | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 139,380,748 | ||
Entity Public Float | $ 1,600,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 269,741 | $ 1,200,725 |
Accounts receivable, net of allowance for doubtful accounts of $0 and $7,588, respectively | 1,666,338 | 1,276,992 |
Other current assets | 220,464 | 1,408,426 |
Total current assets | 2,156,543 | 3,886,143 |
Property and equipment, net | 1,978,020 | 2,486,666 |
Other Assets: | ||
Restricted cash | 0 | 750,000 |
Intangible assets, net | 830,682 | 746,140 |
Operating lease asset | 85,942 | |
Other assets, net | 240,700 | 310,592 |
Total other assets | 1,157,324 | 1,806,732 |
Total assets | 5,291,887 | 8,179,541 |
Current Liabilities: | ||
Accounts payable | 439,851 | 509,298 |
Notes payable, current portion, net of debt costs of $0 and $0, respectively | 20,563,786 | 15,513,786 |
Operating lease liability | 91,363 | |
Other current liabilities | 4,505,505 | 1,416,240 |
Total current liabilities | 25,600,505 | 17,439,324 |
Long-term Liabilities: | ||
Senior secured notes, net of debt discount and debt costs of $5,774,915 and $9,717,161, respectively | 50,835,220 | 46,892,974 |
Senior secured convertible notes, net of debt discount and debt costs of $4,320,038 and $4,714,453, respectively | 20,599,475 | 17,481,632 |
Notes payable, net of debt costs of $0 and $815,062 | 4,184,938 | |
Total long-term liabilities | 71,434,695 | 68,559,544 |
Total liabilities | 97,035,200 | 85,998,868 |
Commitments and Contingencies (NOTE 10) | ||
Stockholders' Deficit: | ||
Preferred stock - par value $0.001; 20,000,000 shares authorized; no shares issued and outstanding | ||
Common stock - par value $0.001; 500,000,000 shares authorized at December 31, 2019 and 300,000,000 shares authorized at December 31, 2018; 139,380,748 shares issued and outstanding | 139,381 | 139,381 |
Additional paid in capital | 84,244,343 | 84,027,883 |
Accumulated deficit | (176,127,037) | (161,986,591) |
Total stockholders' deficit | (91,743,313) | (77,819,327) |
Total liabilities and stockholders' deficit | $ 5,291,887 | $ 8,179,541 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 7,588 |
Notes payable, current debt costs | 0 | 0 |
Debt discount and debt issuance costs | 5,774,915 | 9,717,161 |
Senior secured convertible notes, debt discount and debt costs | 4,320,038 | 4,714,453 |
Notes payable, debt costs | $ 0 | $ 815,062 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 20,000,000 | 20,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 500,000,000 | 300,000,000 |
Common stock, issued | 139,380,748 | 139,380,748 |
Common stock, outstanding | 139,380,748 | 139,380,748 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues, net | $ 6,294,122 | $ 6,096,153 |
Operating expenses: | ||
Network operations | 3,033,130 | 3,405,198 |
General and administration | 4,189,409 | 3,234,009 |
Sales and marketing | 250,596 | 394,548 |
Research and development | 1,400,325 | 1,429,022 |
Depreciation and amortization | 720,567 | 1,284,616 |
Total operating expense | 9,594,027 | 9,747,393 |
Operating loss | (3,299,905) | (3,651,240) |
Other income and (expense) | ||
Interest expense | (10,851,162) | (12,452,113) |
Interest income | 761 | 3,072 |
Other income | 9,860 | 22,431 |
Total other income (expense) | (10,840,541) | (12,426,610) |
Loss before taxes | (14,140,446) | (16,077,850) |
Provision for income taxes | 0 | 0 |
Net loss | $ (14,140,446) | $ (16,077,850) |
Net loss per share (in dollars per share) | $ (0.10) | $ (0.12) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 139,380,748 | 139,380,748 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance, beginning at Dec. 31, 2017 | $ 139,381 | $ 83,617,896 | $ (145,908,741) | $ (62,151,464) |
Balance, beginning (in shares) at Dec. 31, 2017 | 139,380,748 | |||
Options granted as compensation | 262,953 | 262,953 | ||
Beneficial conversion features for senior secured convertible notes | 133,220 | 133,220 | ||
Revaluation of Rockwell Holdings I, LLC warrant | 13,814 | 13,814 | ||
Net loss | (16,077,850) | (16,077,850) | ||
Balance, ending at Dec. 31, 2018 | $ 139,381 | 84,027,883 | (161,986,591) | (77,819,327) |
Balance, ending (in shares) at Dec. 31, 2018 | 139,380,748 | |||
Options granted as compensation | 195,657 | 195,657 | ||
Beneficial conversion features for senior secured convertible notes | 6,392 | 6,392 | ||
Issuance of warrants to purchase common stock | 14,411 | 14,411 | ||
Net loss | (14,140,446) | (14,140,446) | ||
Balance, ending at Dec. 31, 2019 | $ 139,381 | $ 84,244,343 | $ (176,127,037) | $ (91,743,313) |
Balance, ending (in shares) at Dec. 31, 2019 | 139,380,748 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITES | ||
Net loss | $ (14,140,446) | $ (16,077,850) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Depreciation | 666,387 | 1,234,582 |
Amortization of debt discount and debt costs | 4,357,463 | 3,863,329 |
Amortization of deferred installation costs | 91,694 | 142,458 |
Amortization of deferred debt issuance and debt financing costs | 815,061 | 545,001 |
Amortization of intangible assets | 54,180 | 50,034 |
Allowance for bad debt expense | (7,588) | 7,588 |
Interest incurred and paid in kind | 2,673,428 | 5,197,408 |
Stock based compensation related to options granted | 195,657 | 262,953 |
Stock based costs related to warrants issued | 13,814 | |
Loss on disposal of assets | 249 | 32,592 |
Write off of deferred installation costs | 9,277 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (381,757) | (73,612) |
Other current assets | 1,187,962 | (822,804) |
Other assets | 167,409 | 16,394 |
Accounts payable | (69,447) | 143,998 |
Other current liabilities | 2,943,669 | 666,184 |
Other long-term liabilities | (43,583) | |
Net cash flows used in operating activities | (1,436,802) | (4,841,514) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (157,988) | (432,299) |
Payment for deferred installation costs | (47,472) | (61,596) |
Patent, trademark and other intangible asset costs | (138,722) | (130,258) |
Net cash flows used in investing activities | (344,182) | (624,153) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from senior secured convertible promissory notes | 50,000 | 3,050,000 |
Proceeds from promissory notes | 200,000 | |
Repayment of notes payable | (150,000) | (200,000) |
Net cash flows provided by financing activities | 100,000 | 2,850,000 |
Decrease in cash | (1,680,984) | (2,615,667) |
Cash, cash equivalents and restricted cash, beginning of period | 1,950,725 | 4,566,392 |
Cash, cash equivalents and restricted cash, end of period | 269,741 | 1,950,725 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 150,000 | 2,029,450 |
Cash paid for income taxes | ||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||
Beneficial conversion features for senior secured convertible notes | $ 6,392 | $ 133,220 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION CareView Communications, Inc., a Nevada corporation (“CareView”, the “Company”, “we”, “us” or “our”), was originally formed in California on July 8, 1997 under the name Purpose, Inc., changing our name to Ecogate, Inc. in April 1999, and CareView Communications, Inc. in October 2007. We began our current operation in 2003 as a healthcare information technology company with a patented patient monitoring and entertainment system. Our business consists of a single segment of products and services all of which are sold and provided within the United States. Description of Business Our mission is to be the leading provider of products and on-demand application services for the healthcare industry, specializing in bedside video monitoring, software tools to improve hospital communications and operations, and patient education and entertainment packages. Our proprietary, high-speed data network system is the next generation of patient care monitoring that allows real-time bedside and point-of-care video monitoring designed to improve patient safety and overall hospital costs. The entertainment packages and patient education enhance the patient’s quality of stay. Reported results from CareView-driven facilities prove that our products reduce falls, reduce the cost of sitter fees, increase patient satisfaction and reduce bed turnaround time to increase patient flow. For patients, we have a convenient in-room, entertainment package that includes high-speed Internet, access to first-run on-demand movies and visual connectivity to family and friends from anywhere in the world. For the hospital, we offer tools to provide superior patient care, peace of mind and customer service satisfaction. CareView System Our CareView System® suite of video monitoring, guest services and related applications connect patients, families and healthcare providers. Through the use of telecommunications technology and the Internet, our evolving products and on-demand services greatly increase the access to quality medical care and education for patients/consumers and healthcare professionals. We understand the importance of providing high quality patient care in a safe environment and believe in partnering with hospitals to improve the quality of patient care and safety by providing a system that monitors continuously. We are committed to providing an affordable video monitoring tool to improve the practice of nursing, create a better work environment and make the patient’s hospital stay more informative and satisfying. Our suite of products and services can simplify and streamline the task of preventing and managing patients’ falls, enhance patient safety, improve quality of care and reduce costs associated with bringing information technology directly to patients, families and healthcare providers. Our products and services can be used in all types of hospitals, nursing homes, adult living centers and selected outpatient care facilities domestically and internationally. CareView’s secure video monitoring system connects the patient room to a touchscreen monitor at the nursing station or a mobile handheld device, allowing the nursing staff to maintain a level of visual contact with each patient. This configuration enhances the use of the nurse call system, reduces unnecessary steps to and from patient rooms, and facilitates a host of modules for patient safety and workflow improvements. The CareView System suite can be easily configured to meet the individual privacy and security requirements of any hospital or nursing facility. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA’) compliant patient approved video record can be included as part of the patient’s medical record and serves as additional documentation of bedside care, procedures performed, patient and hospital ancillary activities, safety or care incidents, support to necessitate additional clinical services, and, if necessary, as evidence. Additional HIPAA compliance features allow privacy options to be enabled at any time by the patient, nurse or physician. In addition to patient safety and security, we also provide a suite of services to increase patient satisfaction scores and enhance the overall image of the hospital including first-run on-demand movies, Internet access via the patient’s television, and video visits with family and friends from most places throughout the world. Through continued investment in patient care technology, our products and services help hospitals and assisted living facilities build a safe, high quality healthcare delivery system that best serves the patient, while striving for the highest level of satisfaction and comfort. CareView Connect Our mission is to be the leading provider of resident monitoring products and services for the long-term care industry. We took what we learned in our medical facility business and applied it to developing a product to serve the long-term care market. With CareView Connect TM With this mission in mind, in the second quarter of 2018, the Company introduced a new sensor product that will have application in both the assisted living center market and the home health market. CareView Connect leverages both passive and active sensors to track the activities of daily life. CareView Connect provides peace of mind by using data from the resident’s activity, existing conditions, and environment to notify a caregiver of potential emergencies and identify the need for dignified support. CareView Connect consists of a small emergency assist button, two motion sensors, one sleep sensor, and one event sensor. Resident activity levels, medication administration, sleep patterns, and requests for assistance can all be monitored depending on which options are selected. The skilled nursing home market consists of approximately 2,000,000 beds, which is double the size of the current hospital/healthcare facility bed market. The assisted living center market is even larger at approximately 3,000,000 beds. Our products flow naturally into the nursing home space as it is substantially the same setting as hospital rooms. During 2019, the Company was only able to enter into two pilot contracts, one of which was converted into a fully executed contract in the amount of $1,464 in August 2019, the other remains a pilot contract. Due to the lack of recent marketability of the Connect product and our additional focus on CareView system sales in the fourth quarter of 2019, we have written off CareView Connect product on hand as of December 31, 2019, in the amount of approximately $1,131,000. This loss was included in general and administrative expenses in the statement of operations. The Company is still pursuing opportunities for its CareView Connect product. Principles of Consolidation The accompanying consolidated financial statements include the accounts of CareView and CareView Communications, Inc., a Texas corporation and CareView Operations, LLC, a Nevada limited liability company (our wholly owned subsidiaries). All material inter-company balances and transactions have been eliminated in consolidation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. We maintain cash at financial institutions that at times may exceed federally insured limits. Restricted Cash At December 31, 2019 and 2018, we had $0 and $750,000 included in restricted cash in other assets on the consolidated balance sheet. Trade Accounts Receivable Trade accounts receivable are customer obligations due under normal trade terms. We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Trade accounts receivable past due more than 90 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluations, results of collection efforts, and specific circumstances of the customer. Recoveries of accounts previously written off are recorded as reductions of bad debt expense when received. At December 31, 2019 and 2018, an allowance for doubtful accounts of $0 and $7,588, respectively, was recorded. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs are charged to operating expense as incurred. We include Network Equipment in fixed assets upon receipt and begin depreciating the Network Equipment when such equipment passes our incoming inspection and is available for use. We attribute no salvage value to the Network Equipment and depreciation is computed using the straight-line method based on the estimated useful life of seven years. Depreciation of office and test equipment, warehouse equipment and furniture is computed using the straight-line method based on the estimated useful lives of the assets, generally three years for office and test equipment, and five years for warehouse equipment and furniture. Allowance for System Removal We would remove the CareView System from customer premises due to a number of factors; including, but not limited to, collection/revenue performance issues and contract expiration/non-renewal. We regularly evaluate the installed CareView Systems for such factors and an allowance is set up based on the estimated cost of removal. At December 31, 2019 and 2018, an allowance of $152,800 and $236,650, respectively, was recorded in other assets in the accompanying consolidated financial statements. Impairment of Long-Lived Assets Carrying values of property and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Such events or circumstances include, but are not limited to: ● Significant declines in an asset’s market price; ● Significant deterioration in an asset’s physical condition; ● Significant changes in the nature or extent of an asset’s use or operation; ● Significant adverse changes in the business climate that could impact an asset’s value, including adverse actions or assessments by regulators; ● Accumulation of costs significantly in excess of original expectations related to the acquisition or construction of an asset; ● Current-period operating or cash flow losses combined with a history of such losses or a forecast that demonstrates continuing losses associated with an asset’s use; and ● Expectations that it is more likely than not that an asset will be sold or otherwise disposed of significantly before the end of our previously estimated useful life. If impairment indicators are present, we determine whether an impairment loss should be recognized by testing the applicable asset or asset groups’ carrying value for recoverability. This test requires long-lived assets to be grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, the determination of which requires judgment. We estimate the undiscounted future cash flows expected to be generated from the use and eventual disposal of the assets and compare that estimate to the respective carrying values in order to determine if such carrying values are recoverable. This assessment requires the exercise of judgment in assessing the future use of and projected value to be derived from the eventual disposal of the assets to be held and used. Assessments also consider changes in asset utilization, including the temporary idling of capacity and the expected timing for placing this capacity back into production. If the carrying value of the asset is not recoverable, then a loss is recorded for the difference between the assets’ fair value and respective carrying value. The fair value of the asset is determined using an “income approach” based upon a forecast of all the expected discounted future net cash flows associated with the subject assets. Some of the more significant estimates and assumptions include market size and growth, market share, projected selling prices, manufacturing cost and discount rate. Our estimates are based upon our historical experience, our commercial relationships, market conditions and available external information about future trends. We believe our current assumptions and estimates are reasonable and appropriate; however, unanticipated events and changes in market conditions could affect such estimates resulting in the need for an impairment charge in future periods. During the years ended December 31, 2019 and 2018, no impairment was recognized. Research and Development Research and development costs are expensed as incurred. Costs regarding the development of software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. We did not capitalize any such costs during the years ended December 31, 2019 and 2018. Intellectual Property We capitalize certain costs of developing software upon the establishment of technological feasibility and prior to the availability of the product for general release to customers for our CareView System in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Capitalized costs are reported at the lower of unamortized cost or net realizable value and are amortized over the estimated useful life of the CareView System not to exceed five years. Additionally, we test our intangible assets for impairment whenever circumstances indicate that their carrying value may not be recoverable. No impairment was recorded during the years ended December 31, 2019 and 2018. During the years ended December 31, 2019 and 2018, we capitalized no additional intellectual property costs. Patents and Trademarks We amortize our intangible assets with a finite life on a straight-line basis, over 10 years for trademarks and 20 years for patents. We begin amortization of these costs on the date patents or trademarks are awarded. Derivative Financial Instruments Derivatives are recorded on the balance sheet at fair value and changes in fair value are recorded in earnings at each reporting date in accordance with GAAP. See Fair Value of Financial Instruments, Fair Value of Financial Instruments Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates our fair value because of the short-term maturity of such instruments, and they are considered Level 1 assets under the fair value hierarchy. We have elected not to carry our debt instruments at fair value. Interest rates that are currently available to us for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of our short and long-term debt and would be considered Level 3 inputs under the fair value hierarchy. We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: Level 1 Level 2 Level 3 The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the warrant liability discussed in NOTE 4. The fair value of this warrant liability is included in other current liabilities on the accompanying consolidated financial statements. At December 31, 2019 and 2018, we had no financial assets and liabilities reported at fair value. The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the year ended December 31: Fair Value Measurements Using 2019 2018 Balance, beginning of period $ $ (11,157 ) Issuances of derivative liabilities — — Change in fair value of warrant liability — 11,157 Transfers in and/out of Level 3 — — Balance, end of period $ — $ — The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balances of the Level 3 financial instrument presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with GAAP, we recognize the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. We recognize both interest and penalties related to uncertain tax positions as part of the income tax provision. Revenue Recognition We adopted Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) on January 1, 2018 using the full retrospective transition method for recognizing revenue. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of our services to our customers and will provide financial statement readers with enhanced disclosures. We have employed the practical expedient discussed in ASC 606-10-55-18 related to invoicing as we have the right to consideration from our customers in the amount that corresponds directly with the value to the customer of our performance completed to date and therefore we recognize revenue upon invoicing as further discussed below. Further, for those customers for which we are required to collect sales taxes, we record such sales taxes on a net basis which has no effect on the amount of revenue or expenses recognized as the sales taxes are a flow through to the taxing authority. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We offer CareView’s services through a subscription-based contract with each healthcare facility for a standard term of three to five years and have determined we have one performance obligation for our services. We begin to bill monthly subscription fees to the healthcare facility upon official acceptance of the CareView System by the healthcare facility which is when the service is initiated. When services begin, the customer simultaneously receives the use and benefit of that service and we recognize the revenue over time based on the service completed to date as the amount invoiced each month. The contract requires the healthcare facility to pay us the subscription fee monthly. During the term of the contract, we provide continuous monitoring of the CareView System and are required to maintain and service all CareView System equipment. If the healthcare facility requires additional services, the contract is amended accordingly. The company evaluated the disaggregation criteria of ASC 606 and determine that based on the nature, amount, timing and uncertainty of our service revenues, there were no material differences that merited further disaggregation as compared to the total revenue as reported in the accompanying consolidated statements of operations. We defer and capitalize all costs associated with the installation of the CareView System into a healthcare facility until the CareView System is fully operational and accepted by the healthcare facility. Installation costs are specifically identifiable based on the amounts we are charged from third party installers or directly identifiable labor hours incurred for each installation. Upon acceptance, the associated costs are expensed on a straight-line basis over the life of the contract with the healthcare facility. These costs are included in network operations on the accompanying consolidated statements of operations. The table below details the activity in these deferred installation costs during the years ended December 31, 2019 and 2018, including in other assets in the accompanying consolidated balance sheet. For the Years Ended 2019 2018 Balance, beginning of period $ 134,686 $ 215,548 Additions 47,472 61,596 Transfer to expense (100,970 ) (142,458 ) Balance, end of period $ 81,188 $ 134,686 From time to time, we enter into contracts with healthcare facilities wherein full payment of the contractual obligation is paid in advance (“PIA Contracts”). The transaction is recorded as a contract liability and is included in other current liabilities in the accompanying consolidated balance sheet, with revenue recorded and the contract liability reduced as services are provided under the contract. The table below details this activity during the years ended December 31, 2019 and 2018. For the Years Ended 2019 2018 Balance, beginning of period $ 58,559 $ 17,430 Additions 389,836 192,506 Transfer to revenue (192,997 ) (151,377 ) Balance, end of period $ 255,398 $ 58,559 As of December 31, 2019, future transfers to revenue are as follows: Years Ending December 31, Amount 2020 $ 137,883 2021 73,447 2022 44,068 $ 255,398 Based on our contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, except in the case of PIA Contracts as detailed above, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional and are reported accordingly on our consolidated financial statements. Accounting Standard Update 2016-02, Leases Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has an operating lease primarily consisting of office space with remaining lease term of 12 months. We adopted Accounting Standard Update (“ASU”) 2016-02, Leases under the modified retrospective transition method for all long-term operating leases as of January 1, 2019. The cumulative impact of the adoption of ASU 2016-02 to the condensed consolidated balance sheet as of January 1, 2019 was as follows: Operating Lease Asset $ 236,959 Operating Lease Liability-ST $ 166,955 Operating Lease Liability-LT $ 83,477 The adoption of ASU 2016-02 did not result in an adjustment to retained earnings. The adoption of ASU-2016-02 represents a change in accounting principle. Earnings Per Share We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants to purchase our Common Stock (the “Warrants”) and convertible debt. Potential common shares totaling approximately 161,000,000 and 146,000,000 at December 31, 2019 and 2018, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. Stock Based Compensation We recognize compensation expense for all share-based payments granted and amended based on the grant date fair value estimated in accordance with GAAP. Compensation expense is generally recognized on a straight-line basis over the employee’s requisite service period based on the award’s estimated lives for fixed awards with ratable vesting provisions. Debt Discount Costs Costs incurred with parties who are providing long-term financing, with Warrants issued with the underlying debt, are reflected as a debt discount based on the relative fair value of the debt and Warrants. These discounts are generally amortized over the life of the related debt, using the effective interest rate method or other methods approximating the effective interest method. Additionally, convertible debt issued with a beneficial conversion feature is recorded at a discount based on the difference in the effective conversion price and the fair value of the Company’s stock on the date of issuance, if any. Outstanding debt is presented net of any such discounts on the accompanying consolidated financial statements. Deferred Debt Issuance and Debt Financing Costs Costs incurred through the issuance of Warrants to parties who are providing long-term financing availability, which includes revolving credit lines, are reflected as deferred debt issuance based on the fair value of the Warrants issued. Costs incurred with third parties related to issuance of debt are recorded as deferred financing costs. These costs are generally amortized over the life of the financing instrument using the effective interest rate method or other methods approximating the effective interest method. Amounts associated with our senior secured convertible notes are netted with the outstanding debt on the accompanying consolidated financial statements while amount associated with credit facilities are presented in other assets on the accompanying consolidated statements of operations. Shipping and Handling Costs We expense all shipping and handling costs as incurred. These costs are included in network operations on the accompanying consolidated statements of operations. Advertising Costs We consider advertising costs as costs associated with the promotion of our products through the various media outlets and trade shows. We expense all advertising costs as incurred. Our advertising expense for the years ended December 31, 2019 and 2018 totaled approximately $30,000 and $103,000, respectively. Concentration of Credit Risks and Customer Data During 2019 one customer comprised $1,538,193 or 25% of our revenue, while no other customer comprised more than 10%. During 2018 one customer comprised $1,532,823 or 25% of our revenue, while no other customer comprised more than 10%. Use of Estimates Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to contingencies, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Recent Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets while recognizing expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. In July 2018, the FASB amended the new leases standard and issued ASU 2018-11, Leases, (Topic 842): Targeted Improvements to give entities another option for transition and to provide lessors with a practical expedient. We adopted ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Comparative financial information were not adjusted and will continue to be reported under ASC 840. We also elected the transition relief package of practical expedients and as a result we did not assess (1) whether existing or expired contracts contain leases, (2) lease classification for any existing or expired leases, and (3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less. We elected not to separate lease components from non-lease components for our specified asset classes. Additionally, the adoption of the new standard resulted in increased disclosure requirements in our quarterly and annual filings. Reclassification Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. |
GOING CONCERN, LIQUIDITY AND MA
GOING CONCERN, LIQUIDITY AND MANAGMENTS PLAN | 12 Months Ended |
Dec. 31, 2019 | |
Joint Venture Agreement | |
GOING CONCERN, LIQUIDITY AND MANAGMENTS PLAN | NOTE 3 – GOING CONCERN, LIQUIDITY AND MANAGMENTS PLAN Our cash position at December 31, 2019 was approximately $269,741. Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-K (“evaluation period”). As such, we have evaluated if cash and cash equivalents on hand and cash generated through operating activities would be sufficient to sustain projected operating activities through March 30, 2021. We anticipate that our current resources, along with cash generated from operations, will not be sufficient to meet our cash requirements throughout the evaluation period, including funding anticipated losses and scheduled debt maturities. We expect to seek additional funds from a combination of dilutive and/or nondilutive financings in the future. Because such transactions have not been finalized, receipt of additional funding is not considered probable under current accounting standards. If we do not generate sufficient cash flows from operations and obtain sufficient funds when needed, we expect that we would scale back our operating plan by deferring or limiting some, or all, of our capital spending, reducing our spending on travel, and/or eliminating planned headcount additions, as well as other cost reductions to be determined. Because such contingency plans have not been finalized (the specifics would depend on the situation at the time), such actions also are not considered probable for purposes of current accounting standards. Because, under current accounting standards, neither future cash generated from operating activities, nor management’s contingency plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern. As we continue to incur losses, our transition to profitability is dependent upon achieving a level of revenues adequate to support its cost structure. We may never achieve profitability, and unless and until doing so, we intend to fund future operations through additional dilutive or non-dilutive financings. There can be no assurances, however, that additional funding will be available on terms acceptable to us, if at all. Because, under current accounting standards, neither future cash generated from operating activities, nor management’s contingency plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern through March 30, 2021. The financial information contained in these financial statements have been prepared on a basis that assumes that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. This financial information and these financial statements do not include any adjustments that may result from the outcome of this uncertainty. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 4 – STOCKHOLDERS’ EQUITY Preferred Stock At December 31, 2019 and 2018, we had 20,000,000 shares of Preferred Stock, par value $0.001 authorized and none outstanding, which can be designated by our Board of Directors. Common Stock At December 31, 2019 and 2018, we had 500,000,000 and 300,000,000 shares of Common Stock, $0.001 par value, respectively, authorized, and 139,380,748 shares of Common Stock issued and outstanding. There was no Common Stock issued during the years ended December 31, 2019 or 2018. Warrants to Purchase Common Stock of the Company We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of Warrants (except certain Warrants issued to HealthCor in 2011 (the “2011 HealthCor Warrants”) as discussed in NOTE 12 and the warrants issued in connection with a private placement completed in April 2013 (“Private Placement Warrants”). The Black-Scholes Model is an acceptable model in accordance with GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants and is calculated by using the average daily historical stock prices through the day preceding the grant date. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of our stock prices (and that of peer entities whose stock prices were publicly available) over a period equal to the expected life of the awards. Where appropriate we used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price during 2007-2009. Expired/Canceled Warrants Due to the down-round provisions associated with the exercise price of the Private Placement Warrants and the 2011 HealthCor Warrants that protects the holders from a decline in the issue price of our Common Stock, we determined that the Binomial Lattice model was the most appropriate model for valuing these instruments. The fair value of the 2011 HealthCor Warrants and the Private Placement Warrants was computed incorporating transaction details such as the price of our Common Stock, contractual terms, maturity and risk-free rates, as well as assumptions about future financings, volatility, and holder behavior. As of December 31, 2019: ● Private Placement Warrants. In accordance with the accounting standards, we determined that the Private Placement Warrants qualified as derivative liabilities and should be recorded at their fair value on the date of issuance and re-measured at fair value each reporting period with the change reported in earnings. In March 2018, the Private Placement Warrants expired and the fair value was recovered and recorded as income in the accompanying consolidated financial statements. ● 2011 HealthCor Warrants. The 2011 HealthCor Warrants were substantially amended in December 2011, pursuant to an amendment to the Note and Warrant Purchase Agreement that, among other things, eliminated the down-round provisions. In July 2018, pursuant to the Ninth Amendment to the Note and Warrant Purchase Agreement, the 2011 HealthCor Warrants were canceled. See NOTE 12 for further details. Active Warrant Holders As of December 31, 2019, our active warrant holders, as aggregated in the table below, include: (i) PDL Investment (see NOTE 11 for further details); (ii) HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and the 2019 Investor (see NOTE 12 for further details); (iii) Rockwell (see NOTE 13 for further details) and (iv) certain other warrant holders. All of the warrants in the table below have been recorded as equity. A summary of our Warrants activity and related information follows: Number of Shares Under Warrant Range of Warrant Price Per Share Weighted Average Exercise Price Weighted Average Remaining Contractual Life Balance at December 31, 2017 30,054,389 $0.33-$1.65 $0.85 4.6 Granted 512,500 $0.05 $.05 9.2 Canceled (11,782,859 ) Expired (2,500,000 ) Balance at December 31, 2018 16,284,030 $0.05-$1.10 $0.49 4.9 Granted 250,000 $0.03 $.03 9.4 Canceled — Expired — Balance at December 31, 2019 16,534,030 $0.03-$1.10 $0.49 4.4 Vested and Exercisable at December 31, 2019 16,534,030 As of December 31, 2019 and 2018, we had no unamortized costs associated with capitalized Warrants. Warrant Activity During 2019 In May 2019, we issued 250,000 ten-year Warrants (with a fair value of $4,000) at an exercise price of $0.03 per share to a director. Warrant Activity During 2018 In February 2018, 512,500 Warrants were issued to an entity and certain officers and directors of the Company. In March 2018, the 2,500,000 Private Placement Warrants expired and in September 2018, the 11,782,859 2011 HealthCor Warrants were canceled. Stock Options Effective December 3, 2007, we established the CareView Communications, Inc. 2007 Stock Incentive Plan (“2007 Plan”) pursuant to which 8,000,000 shares of Common Stock were reserved for issuance upon the exercise of options (“2007 Plan Option(s)”). The 2007 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors, and certain consultants and advisors. The 2007 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. At December 31, 2019, 2007 Plan Options to purchase 8,000,000 shares of our Common Stock have been issued with zero remaining outstanding Effective September 30, 2009, we established the CareView Communications, Inc. 2009 Stock Incentive Plan (the “2009 Plan”) pursuant to which 10,000,000 shares of Common Stock was reserved for issuance upon the exercise of options (“2009 Plan Option(s)”). The 2009 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors. The 2009 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. As of December 31, 2019, 2009 Plan Options to purchase 10,000,000 shares of our Common Stock have been issued with 4,979,426 remaining outstanding. On February 25, 2015, we established the CareView Communications, Inc. 2015 Stock Option Plan (the “2015 Plan”) pursuant to which 5,000,000 shares of Common Stock was reserved for issuance upon the exercise of options (“2015 Plan Option(s)”). The 2015 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors. The 2015 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. As of December 31, 2019, 2015 Plan Options to purchase 5,000,000 shares of our Common Stock have been issued with 3,986,000 remaining outstanding. On December 7, 2016, we established the CareView Communications, Inc. 2016 Stock Option Plan (the “2016 Plan”) pursuant to which 20,000,000 shares of Common Stock was reserved for issuance upon the exercise of options (“2016 Plan Option(s)”). The 2016 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors. The 2016 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. As of December 31, 2019, 2016 Plan Options to purchase 12,262,034 shares of our Common Stock have been issued 11,559,367 remaining outstanding. The valuation methodology used to determine the fair value of the 2007 Plan Options, 2009 Plan Options, 2015 Plan Options and 2016 Plan Options, collectively, (the “Option(s)”) issued was the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average expected term of the options. A summary of our Option activity and related information follows: Number of Weighted Weighted Aggregate Balance at December 31, 2017 22,660,459 $ 0.27 8.1 $ — Expired (711,835 ) Canceled (248,331 ) Balance at December 31, 2018 21,700,293 $ 0.26 7.1 $ — Expired (1,106,334 ) Canceled (69,167 ) Balance at December 31, 2019 20,524,792 $ 0.25 6.3 $ — Vested and Exercisable at December 31, 2019 18,087,789 $ 0.27 6.0 $ — No Options were issued during 2019 and 2018. Share-based compensation expense for Options charged to our operating results for the years ended December 31, 2019 and 2018 (approximately $196,000 and $263,000, respectively) is based on awards vested. The estimate of forfeitures are to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from the estimates. We have not included an estimate for forfeitures due to our limited history and we revise based on actual forfeitures each period. At December 31, 2019, total unrecognized estimated compensation expense related to non-vested Options granted prior to that date was approximately $70,000 which is expected to be recognized over a weighted-average period of 1 year. No tax benefit was realized due to a continued pattern of operating losses. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 5 – INCOME TAXES At December 31, 2019, we had approximately $86,500,000 of federal net operating tax loss carry-forward which begins to expire in 2029 and approximately $19,600,000 of state net operating losses which begins to expire in 2029. The differences between the actual income tax benefit and the amount computed by applying the statutory federal tax rate (21% for the year ended December 31, 2019 and 2018) to the loss before taxes are as follows: Years Ended December 31, 2019 2018 Expected income tax benefit at statutory rate $ (2,969,493 ) $ (3,374,011 ) Debt discount amortization 683,911 552,382 Permanently disallowed interest 223,586 293,975 Other permanent differences 10,264 13,359 State income tax benefit, net of tax effect at state statutory rate — — Deferred pool true-ups/corrections related to: Net operating losses — — Other 65,226 (57,073 ) Change in federal tax rate — — Change in valuation account 1,986,506 2,571,368 Income tax expense (benefit) $ — $ — The components of the deferred tax assets and liabilities are as follows: December 31, 2019 2018 Deferred Tax Assets: Tax benefit of net operating loss carry-forward $ 18,162,329 $ 17,794,637 Accrued interest 7,538,930 6,142,738 Stock based compensation 1,265,290 1,224,202 Amortization of intangible assets 100,550 147,604 Depreciation of property and equipment 393,935 390,632 Accrued expenses and other liabilities 60,192 73,920 Research and development credit carry-forward 29,084 29,084 Donations 5,947 6,052 Asset reserve 237,527 — Bad debt allowance 1,591 — Beneficial conversion feature debt discount (1,840,060 ) (1,840,060 ) Total deferred tax assets 25,955,315 23,968,809 Valuation allowance for deferred tax assets (25,955,315 ) (23,968,809 ) Deferred tax assets, net of valuation allowance $ — $ — In 2019 the deferred tax valuation allowance increased by $1,986,506. In 2018 the deferred tax valuation allowance increased by $2,571,368. The realization of the tax benefits is subject to the sufficiency of taxable income in future years. The combined deferred tax assets represent the amounts expected to be realized before expiration. We periodically assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits. As of December 31, 2019 and 2018, we established valuation allowances equal to the full amount of the net deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. For the years ended December 31, 2019 and 2018, no amounts have been recognized for uncertain tax positions and no amounts have been assessed or recognized related to interest or penalties related to uncertain tax positions. We have determined that it is not reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next twelve months. We are currently subject to the general three-year statute of limitation for federal tax. Under this general rule, the earliest period subject to potential audit is 2016. For years in which the company may utilize its net operating losses, the IRS has the ability to examine the tax year that generated those losses and propose adjustments up to the amount of losses utilized. |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER CURRENT ASSETS | NOTE 6 – OTHER CURRENT ASSETS Other current assets consist of the following: December 31, 2019 2018 Prepaid equipment $ 102,215 $ 1,394,044 Other prepaid expenses 109,185 — Other current assets 9,064 14,382 TOTAL OTHER CURRENT ASSETS $ 220,464 $ 1,408,426 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, 2019 2018 Network equipment $ 12,424,248 $ 12,302,328 Office equipment 207,608 293,709 Vehicles 217,004 217,004 Test equipment 197,090 175,603 Furniture 91,341 90,827 Warehouse equipment 9,524 9,524 Leasehold improvements 5,121 5,121 13,151,936 13,094,116 Less: accumulated depreciation (11,173,916 ) (10,607,450 ) TOTAL PROPERTY AND EQUIPMENT $ 1,978,020 $ 2,486,666 Depreciation expense for the years ended December 31, 2019 and 2018 was $666,387 and $1,234,582, respectively. |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS | NOTE 8 – OTHER ASSETS Intangible assets consist of the following: December 31, 2019 Cost Accumulated Net Patents and trademarks $ 1,070,871 $ 243,702 $ 827,169 Other intangible assets 63,509 59,996 3,513 TOTAL INTANGIBLE ASSETS $ 1,134,380 $ 303,698 $ 830,682 December 31,2018 Cost Accumulated Amortization Net Patents and trademarks $ 932,149 $ 192,995 $ 739,154 Other intangible assets 63,508 56,522 6,986 TOTAL INTANGIBLE ASSETS $ 995,657 $ 249,517 $ 746,140 Other assets consist of the following: December 31, 2019 Cost Accumulated Amortization Net Deferred installation costs $ 1,288,156 $ 1,206,968 $ 81,188 Prepaid license fee 249,999 136,611 113,388 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 1,584,279 $ 1,343,579 $ 240,700 December 31,2018 Cost Accumulated Amortization Net Deferred installation costs $ 1,810,414 $ 1,675,728 $ 134,686 Prepaid license fee 249,999 120,217 129,782 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 2,106,537 $ 1,795,945 $ 310,592 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
OTHER CURRENT LIABILITIES | NOTE 9 – OTHER CURRENT LIABILITIES Other current liabilities consist of the following: December 31, 2019 2018 Accrued interest $ 3,751,061 $ 750,548 Allowance for system removal 152,800 236,650 Accrued paid time off 112,176 129,773 Deferred commission 139,041 117,206 Accrued rent expense 22,161 68,780 Deferred revenue 255,398 58,559 Accrued taxes 29,309 23,156 Insurance Premium Financing 19,360 — Other accrued liabilities 24,199 31,568 TOTAL OTHER CURRENT LIABILITIES $ 4,505,505 $ 1,416,240 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES Operating Lease On September 8, 2009, we entered into a Commercial Lease Agreement (the “Lease”) for 10,578 square feet of office and warehouse space expiring on June 30, 2015. On December 8, 2014, we entered into a Lease Extension Agreement (the “Lease Extension”), wherein we extended the Lease through June 30, 2020. The Lease Extension contains a renewal provision under which we may renew the Lease for an additional five-year period under the same terms and conditions. Rent expense for the years ended December 31, 2019 and 2018 was $263,664 and $233,497, respectively. Monthly base rent per the Lease and the Lease Extension through the end of term, June 30, 2020, is $15,968. Future minimum payments through the end of term are $95,810. On March 4, 2020, we entered into the fourth amendment to the commercial lease agreement extending the terms. See Note 14 in accompanying consolidated financial statements. Debt Maturity As of December 31, 2019, future debt payments due are as follows: Years Total Note Payable Senior (1) Notes Payable 2020 $ 20,563,786 $ 20,563,786 $ — $ — 2021 45,966,949 — — 45,966,949 2022 10,643,186 — — 10,643,186 2023 — — — — Thereafter 24,919,513 — 24,919,513 — Total $ 102,093,434 $ 20,563,786 $ 24,919,513 $ 56,610,135 (1) Senior Secured Convertible Notes are included on the accompanying consolidated financial statements as $20,599,475, which represents this amount less debt discount of $4,320,038. (2) Senior Secured Notes are included on the accompanying consolidated financial statements as $50,835,220, which represents the 2021 and 2022 amount due less debt discount of $5,774,915. |
AGREEMENT WITH PDL BIOPHARMA, I
AGREEMENT WITH PDL BIOPHARMA, INC. | 12 Months Ended |
Dec. 31, 2019 | |
Agreement With Pdl Biopharma Inc. | |
AGREEMENT WITH PDL BIOPHARMA, INC. | NOTE 11 – AGREEMENT WITH PDL BIOPHARMA, INC. On June 26, 2015, we entered into a Credit Agreement (as subsequently amended) with PDL BioPharma, Inc. (“PDL”), as administrative agent and lender (“the Lender”) (the “PDL Credit Agreement”). Under the PDL Credit Agreement the Lender made available to us up to $40 million in two tranches of $20 million each. Tranche One was funded on October 8, 2015 (the “Tranche One Loan’). Pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full. From October 8, 2015 through May 14, 2019, the outstanding borrowings under the Tranche One Loan bore interest at the rate of 13.5% per annum, payable quarterly. On May 15, 2019, pursuant to the terms of the Fifth Amendment to the PDL Credit Agreement (see below for additional details), the interest increased to 15.5% per annum, payable quarterly. Also, on May 15, 2019, pursuant to the terms of the Fourteenth Amendment to the PDL Modification Agreement (see below for additional details), the minimum cash balance requirement of $750,000 was reduced to $0. On June 26, 2015, we issued Warrants to PDL for the purchase of an aggregate of 4,444,445 shares of our Common Stock at an exercise price of $0.45 per share (the “PDL Warrant”). On October 7, 2015, we entered into a First Amendment to the PDL Credit Agreement (the “First Amendment”). The First Amendment modified the conditions precedent to the funding of each tranche, such that, among other things, we no longer need to attain a specified milestone relating to the placement of our products in order for the Lender to fund us the Tranche One Loan. Contemporaneously with the execution of the First Amendment we borrowed the Tranche One Loan and issued to the Lender a term note in the principal amount of $20 million (the “Tranche One Term Note”), payable in accordance with the terms of the PDL Credit Agreement, as amended. On October 7, 2015, we also amended and restated the PDL Warrant changing the exercise price from $0.45 to $0.40 per share (the “Amended PDL Warrant”). We evaluated whether there was an increase in fair value which would require recognition of additional costs. No such increase in fair value was noted and no adjustment to the PDL Warrant valuation was necessary. On December 28, 2017, the Company and PDL Investment Holdings, LLC (as assignee of PDL) (“PDL Investment”) entered into a Binding Forbearance Term Sheet (the “Forbearance Term Sheet”) in order to modify certain provisions of the PDL Credit Agreement to prevent any Events of Default from occurring on December 31, 2017. This Forbearance Term Sheet was the governing document until February 2, 2018, at which time, the Company and PDL Investment entered into a Modification Agreement (the “PDL Modification Agreement”), effective December 28, 2017, with respect to the PDL Credit Agreement which reiterated the terms included in the Forbearance Term Sheet and effective February 2, 2018, entered into certain consents and amendments with respect to other existing agreements. In accordance with GAAP, we accounted for this transaction as a debt modification, wherein consideration given to PDL was recorded as deferred closing costs and all third-party payments were considered an expense and recorded as such on the accompanying condensed consolidated financial statements. Details of the PDL Modification Agreement, as amended, are included in our Form 10-K filed with the SEC on March 29, 2019. Pursuant to the terms of the PDL Modification Agreement, as amended, the first principal payment on the Tranche One Loan due on December 31, 2017 in the amount of $1,666,667, and similar principal payments due on March 31, 2018, June 30, 2018, September 30, 2018, December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019 have been delayed and are included in the payment due on January 17, 2020 (see Seventeenth Amendment to the PDL Modification Agreement below for additional details). In accordance with the PDL Credit Agreement, as amended, quarterly interest only payments of $675,000 for each of the first 12 interest payment dates (December 31, 2015 through September 30, 2018) were made timely. Pursuant to the terms of the PDL Modification Agreement, as amended, quarterly interest payments due on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019 have been delayed and are also included in the payment due on January 17, 2020 (see Seventeenth Amendment to the PDL Modification Agreement below for additional details). The obligations under the PDL Credit Agreement, as modified, are secured by a pledge of substantially all of the assets of the Company and certain of its domestic subsidiaries. We executed a Subordination and Intercreditor Agreement (the “Subordination and Intercreditor Agreement”), with the Lender, HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and the 2019 Investor (as defined in NOTE 12) pursuant to which we granted first-priority liens on our pledged assets to the Lender and second-priority liens on such pledged assets to HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and the 2019 Investor. The PDL Credit Agreement, as modified, contains customary affirmative covenants for transactions of this type and other affirmative covenants agreed to by the Company and the Lender, including, among others, the provision of annual and quarterly reports, maintenance of property, insurance, compliance with laws and contractual obligations and payment of taxes. The PDL Credit Agreement, as modified, contains customary negative covenants for transactions of this type and other negative covenants agreed to by the Company and the Lender, including, among others, restrictions on the incurrence of indebtedness, the granting of liens, making restricted payments and investments, entering into affiliate transactions and transferring assets. The PDL Credit Agreement, as modified, calls for a reduction of our operating expenses compared to such expense incurred in October 2017 by at least (i) $113,000 for January 2018, (ii) $148,000 for February 2018 and (iii) $167,000 for each other month for the duration of the Modification Period (see Seventeenth Amendment to the PDL Modification Agreement below for additional details). We are in compliance with this covenant as of the date of this filing. The PDL Credit Agreement, as modified, also provides for a number of customary events of default, including payment, bankruptcy, covenant, representation and warranty and judgment defaults. In addition, contemporaneously with the execution of the PDL Credit Agreement the Company and the Lender executed (i) a Registration Rights Agreement (as amended in the PDL Modification Agreement as discussed above) pursuant to which we agreed to provide the Lender with certain registration rights with respect to the shares of Common Stock issuable upon exercise of the PDL Warrant, (ii) a Guarantee and Collateral Agreement pursuant to which certain of our subsidiaries guaranteed the performance of our obligations under the PDL Credit Agreement, as modified, and granted the Lender a security interest in such subsidiaries’ tangible and intangible assets securing our performance of the same, and (iii) a Patent Security Agreement and a Trademark Security Agreement pursuant to which we granted the Lender a security interest in a certain subsidiary’s tangible and intangible assets securing the performance of our obligations under the PDL Credit Agreement, as modified. On January 31, 2019, February 28, 2019, March 29, 2019 and April 29, 2019, the Company and Lender entered into the Tenth, Eleventh, Twelfth, and Thirteenth Amendments to the PDL Modification Agreement, as previously amended, respectively, pursuant to which the parties agreed to amend the PDL Modification Agreement to provide that (A) the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and, pursuant to the Thirteenth Amendment to the PDL Modification Agreement, May 15, 2019 (rather than January 31, February 28, March 31, and April 30, respectively) (with each such date permitted to be extended by the Lender in its sole discretion); (B) the Company could satisfy its obligations under the PDL Modification Agreement, as amended, to obtain financing by obtaining (a) at least $2,050,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to February 23, 2018 and (b) an additional (i) $750,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to July 13, 2018 and (ii) $750,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to May 15, 2019 (rather than January 31, February 28, March 31, and April 30, respectively) (resulting in aggregate net cash proceeds of at least $3,550,000); and (C) the Company’s quarterly interest payments that would otherwise have been due to Lender on December 31, 2018 and March 31, 2019 would be deferred until May 15, 2019 (the end of the extended Modification Period) and that such deferral would be a Covered Event. On April 9, 2019, the Company, PDL Investment entered into a Fourth Amendment to PDL Credit Agreement (the “Fourth Amendment to the PDL Credit Agreement”), wherein the Company executed an Amended and Restated Tranche One Term Note in the principal amount of $20,000,000 to PDL Investments (the “Amended Tranche One Loan”), pursuant to which the parties agreed, among other things, to amend the note from registered to unregistered form. On May 15, 2019, the Company, the Lender, Steven G. Johnson (our Chief Executive Officer, President, Secretary and Treasurer), individually, and Dr. James R. Higgins (a member of our board of directors), individually (Mr. Johnson and Dr. Higgins, collectively, the “Tranche Three Lenders”) entered into a Fifth Amendment to the PDL Credit Agreement (the “Fifth PDL Credit Agreement Amendment”), pursuant to which the parties agreed to amend the PDL Credit Agreement to, among other things, (i) provide for a new tranche of term loan in the aggregate principal amount of $200,000, from the Tranche Three Lenders, with a maturity date of October 7, 2020 and bearing interest at the rate of 15.5% per annum, payable quarterly in arrears (subject to the terms of the PDL Modification Agreement, as amended) (the “Tranche Three Loan”); (ii) increase the interest rate for outstanding borrowings under the Amended Tranche One Loan from 13.5% per annum to 15.5% per annum, payable quarterly in arrears (subject to the terms of the PDL Modification Agreement, as amended), effective May 15, 2019,; and (iii) provide for the issuance of the Twelfth Amendment Note, pursuant to the terms of the Twelfth Amendment to the HealthCor Agreement (see Note 12 for details). Under the accounting standards, we determined that the restructuring of the Tranche One Loan resulted in a troubled debt restructuring. As the future cash flows were greater than the carrying amount of the debt at the date of the amendment, we accounted for the change prospectively using the new effective interest rate. On May 15, 2019 the Company and the Lender entered into the Fourteenth Amendment to the PDL Modification Agreement (the “Fourteenth Amendment to the PDL Modification Agreement”), pursuant to which, in connection with the Twelfth Amendment to the HealthCor Purchase Agreement (see NOTE 12 for further details) and the Fifth Amendment to the PDL Credit Agreement, the parties agreed to amend the PDL Modification Agreement, as previously amended, to provide that (A) the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and September 30, 2019 (with each such date permitted to be extended by the Lender in its sole discretion); (B) the Borrower could satisfy its obligations under the PDL Modification Agreement, as amended, to obtain financing by obtaining (a) at least $2,050,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to February 23, 2018 and (b) an additional (i) $1,000,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to July 13, 2018 and (ii) $250,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to May 15, 2019 (resulting in aggregate net cash proceeds of at least $3,300,000); (C) the Liquidity required during the Modification Period would be lowered to $0 from $750,000; and (D) the Company’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019 and June 30, 2019 would be deferred until September 30, 2019 (the end of the extended Modification Period) and that such deferrals would be a Covered Event. On September 30, 2019, the Company, the Borrower, the Subsidiary Guarantor and the Lender entered into a Fifteenth Amendment to Modification Agreement (the “Fifteenth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and November 30, 2019 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019, June 30, 2019, and September 30, 2019 would be deferred until November 30, 2019 (the end of the extended Modification Period) and that such deferrals would be a Covered Event. On November 29, 2019, the Company, the Borrower, the Subsidiary Guarantor and the Lender entered into a Sixteenth Amendment to Modification Agreement (the “Sixteenth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and December 31, 2019 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019, June 30, 2019, and September 30, 2019 would be deferred until December 31, 2019 (the end of the extended Modification Period) and that such deferrals would be a Covered Event. On December 31, 2019, the Company, the Borrower, the Subsidiary Guarantor and the Lender entered into a Seventeenth Amendment to Modification Agreement (the “Seventeenth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and January 17, 2020 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019 would be deferred until January 17, 2020 (the end of the extended Modification Period) and that such deferrals would be a Covered Event. The Company has evaluated the Fifteenth, Sixteenth and Seventeenth Amendments and as the effective borrowing rate under the restructured agreement is less than the effective borrowing rate on the old agreement, a concession is deemed to have been granted under ASC 470-60-55-10. As a concession has been granted, the agreement is to be accounted for as a troubled debt restructuring by debtors (TDR) under ASC 470-60. Accounting Treatment In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. The fair value of the PDL Warrant at issuance was $1,257,778, which has been recorded as deferred issuance costs in the accompanying condensed consolidated financial statements. The deferred debt issuance and closing costs associated with the PDL Credit Agreement, as amended, have been presented as contra debt in accordance with the accounting standards. In December 2017, in connection with the PDL Modification Agreement, as amended, the Amended PDL Warrant was again amended (the “Second Amendment to the PDL Warrant’) resulting in an increase in fair value of $44,445, which was recorded as additional deferred debt issuance costs in the accompanying consolidated financial statements. As of December 31, 2019, the Amended PDL Warrant has not been exercised. At December 31, 2019, the outstanding balance of certain debt issuance and closing costs related to the PDL Credit Agreement totaling $0 was recorded as deferred closing costs in the accompanying condensed consolidated financial statements. Historically, the deferred closing costs had been presented as other assets, as the costs were incurred prior the first draw down. The costs should have been reclassified as a direct deduction of the debt when the funds were provided. The costs are presented as a direct deduction from the debt as of December 31, 2019, and $815,062 of such costs that were historically presented as other assets have been reclassified as contra debt in the consolidated balance sheet as of December 31, 2018. Management evaluated this classification error on prior period financial statements and concluded the impact was immaterial. Through December 31, 2018, these costs were amortized to interest expense using the straight-line method over the term of the PDL Credit Agreement, as amended. During the year ended December 31, 2019, the Company and Lender entered into eight amendments to the PDL Modification Agreement (as detailed above), resulting in restructuring of the PDL Credit Agreement and the accounting treatment of the related costs. Under debt modification/troubled debt guidance, we determined that the first of the eight amendments qualified for modification accounting, while the final seven qualified for troubled debt restructuring accounting. As appropriate, we expensed the debt issuance costs paid to third parties as a deferred debt issuance costs and accounted for the change in the effective interest rate prospectively. F The Tranche Three Warrant issued with the Fifth PDL Credit Agreement Amendment did not contain features requiring liability accounting and were recorded at fair value on the date of issuance with the offsetting credit recorded in equity. The value allocated to the Tranche Three Loan Warrant was $3,704 and was recorded as interest expense at December 31, 2019. |
AGREEMENT WITH HEALTHCOR
AGREEMENT WITH HEALTHCOR | 12 Months Ended |
Dec. 31, 2019 | |
Agreement With Healthcor | |
AGREEMENT WITH HEALTHCOR | NOTE 12 – AGREEMENT WITH HEALTHCOR On April 21, 2011, we entered into a Note and Warrant Purchase Agreement (as subsequently amended) with HealthCor Partners Fund, LP (“HealthCor Partners”) and HealthCor Hybrid Offshore Master Fund, LP (“HealthCor Hybrid” and, together with HealthCor Partners, “HealthCor”) . Subject to the terms of the Ninth Amendment as discussed below, HealthCor’s ability to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2011 HealthCor Notes into fully paid and non-assessable shares of our Common Stock has been eliminated. On January 31, 2012, we entered into the Second Amendment to the HealthCor Purchase Agreement with HealthCor (the “Second Amendment”) amending the HealthCor Purchase Agreement and sold Senior Secured Convertible Notes to HealthCor in the principal amounts of $2,329,000 and $2,671,000, respectively (collectively the “2012 HealthCor Notes”). As provided by the Second Amendment, the 2012 HealthCor Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the 2012 HealthCor Notes. The 2012 HealthCor Notes have a maturity date of January 30, 2022. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. At any time after January 30, 2012, HealthCor is entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2012 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $1.25 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2012 HealthCor Notes. Pursuant to the terms of the Ninth Amendment, as discussed below, the accrual of interest has been suspended after September 30, 2018. On August 20, 2013, we entered into a Third Amendment to the HealthCor Purchase Agreement with HealthCor (the “Third Amendment”) to redefine our minimum cash balance requirements. Previously we were required to maintain a minimum cash balance of $5,000,000 and should we drop below that balance, it triggered a default. The Third Amendment allowed for a reduced minimum cash period, as defined in the HealthCor Purchase Agreement, which allowed us to drop below $5,000,000, but not below $4,000,000. All other terms and conditions of the HealthCor Purchase Agreement, including all amendments thereto, remain the same. Upon entering the reduced minimum cash period (which occurred on October 7, 2013), we had 120 days to return our minimum cash balance to the original $5,000,000. On January 16, 2014, we increased our cash balance to in excess of the original $5,000,000 minimum allowable balance. On January 16, 2014, we entered into a Fourth Amendment to the HealthCor Purchase Agreement with HealthCor (the “Fourth Amendment”) and sold Senior Secured Convertible Notes to HealthCor in the principal amounts of $2,329,000 and $2,671,000 (collectively the ‘‘2014 HealthCor Notes’’). As provided by the Fourth Amendment, the 2014 HealthCor Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the 2014 HealthCor Notes. The 2014 HealthCor Notes have a maturity date of January 15, 2024. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. At any time after January 16, 2014, HealthCor is entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2014 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $0.40 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2014 HealthCor Notes. Additionally, we issued Warrants to HealthCor for the purchase of an aggregate of up to 4,000,000 shares of our Common Stock at an exercise price of $0.40 per share (collectively the “2014 HealthCor Warrants”). As of December 31, 2019, the underlying shares of our Common Stock related to the 2014 HealthCor Notes totaled approximately 25,400,000. On December 4, 2014, we entered into a Fifth Amendment to the HealthCor Purchase Agreement (the “Fifth Amendment”) with HealthCor and certain additional investors (such additional investors, the “2015 Investors” and, collectively with HealthCor, the “Investors”) and agreed to sell and issue (i) additional notes in the initial aggregate principal amount of $6,000,000,with a conversion price per share of $0.52 (subject to adjustment as described therein) (the “Fifth Amendment Notes”) and (ii) additional Warrants for an aggregate of up to 3,692,308 shares of our Common Stock at an exercise price per share of $0.52 (subject to adjustment as described therein) (the “Fifth Amendment Warrants”). As provided by the Fifth Amendment, the Fifth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Fifth Amendment Notes. The Fifth Amendment Notes have a maturity date of February 16, 2025. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. The 2015 Investors are composed of all but one of our current directors and one of our officers. On February 17, 2015, the Company and the Investors closed on the transactions contemplated by the Fifth Amendment. In connection with this closing, the Company and the Investors entered into an Amended and Restated Pledge and Security Agreement (the “Amended Security Agreement”), amending and restating that certain Pledge and Security Agreement dated as of April 20, 2011, and an Amended and Restated Intellectual Property Security Agreement (the “Amended IP Security Agreement”), amending and restating that certain Intellectual Property Security Agreement dated as of April 20, 2011. As of December 31, 2019, the underlying shares of our Common Stock related to the Fifth Amendment Notes totaled approximately 3,500,000 to HealthCor and 17,500,000 to the 2015 Investors. On March 31, 2015, we entered into the Ninth Amendment to the HealthCor Purchase Agreement (the “Ninth Amendment”) pursuant to which, among other things, (i) the requirement to maintain a minimum cash balance of $5,000,000 was reduced to a minimum cash balance of $2,000,000 and (ii) the amendment provision was revised to permit the HealthCor Purchase Agreement to be amended by the Company and the holders of the majority of the Common Stock underlying the outstanding notes and warrants to purchase shares of our Common Stock sold pursuant to the HealthCor Purchase Agreement. On March 31, 2015, we also issued a warrant to HealthCor to purchase up to an aggregate of 1,000,000 shares of our Common Stock in consideration for certain prior waivers of the minimum cash balance requirement in the HealthCor Purchase Agreement (the “Ninth Amendment Warrant”). The Ninth Amendment Warrant has an exercise price per share of $0.53 (subject to adjustment as described therein) and an expiration date of March 31, 2025. On June 26, 2015, we (i) entered into a Seventh Amendment to the HealthCor Purchase Agreement (the “Seventh Amendment”) pursuant to which the HealthCor Purchase Agreement was amended to permit the Company to enter into and perform its obligations under the PDL Credit Agreement (as detailed in NOTE 9); (ii) executed an Amendment to the Registration Rights Agreement between the Company and HealthCor dated April 21, 2011 (the “RR Agreement”) pursuant to which the RR Agreement was amended to make its priority of registration consistent with the Registration Rights Agreement executed by the Company and PDL; (iii) amended the 2011 HealthCor Notes to extend the maturity date, in the event that Tranche Two of the PDL Credit Agreement is funded, for such notes to 90 days after the earlier of the Tranche Two maturity date or repayment date, but not later than December 31, 2022, (iv) amended the 2012 HealthCor Notes, to set the maturity date at January 30, 2022 and, in the event that Tranche Two of the PDL Credit Agreement is funded, to extend such maturity date to 90 days after the earlier of the Tranche Two maturity date or repayment date, but later than December 31, 2022; and (v) amended each of the Senior Secured Convertible Notes issued under the HealthCor Purchase Agreement (the “HealthCor Notes”) to, among other things, subordinate the HealthCor Notes to the loans under the PDL Credit Agreement and to increase certain event of default acceleration and payment thresholds. ). As pertains to (iii) and (iv) above, pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full. On February 23, 2018, we entered into an Eighth Amendment to the HealthCor Purchase Agreement (the “Eighth Amendment”) with HealthCor, the 2015 Investors and certain investors (such additional investors, the “February 2018 Investors”) and agreed to sell and issue (i) additional notes in the initial aggregate principal amount of $2,050,000,with a conversion price per share of $0.05 (subject to adjustment as described therein) (the “Eighth Amendment Notes”) and (ii) additional Warrants for an aggregate of up to 512,500 shares of our Common Stock at an exercise price per share of $0.05 (subject to adjustment as described therein) (the “Eighth Amendment Warrants”). As provided by the Eighth Amendment, the Eighth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Eighth Amendment Notes. The Eighth Amendment Notes have a maturity date of February 22, 2028. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. The 2018 Investors are composed of all but one of our current directors, one of our officers and an entity. As of December 31, 2019, the underlying shares of our Common Stock related to the Eighth Amendment Notes totaled approximately 51,400,000 to the February 2018 Investors. On July 10, 2018, we entered into the Ninth Amendment to the HealthCor Purchase Agreement (the “Ninth Amendment”) with HealthCor, the 2015 Investors and the February 2018 Investors, pursuant to which the parties agreed to amend the HealthCor Purchase Agreement, the 2011 HealthCor Notes, the 2012 HealthCor Notes, the 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes, as applicable, to (i) remove the rights of the holders of the 2011 HealthCor Notes and the 2012 HealthCor Notes to convert such notes to Common Stock after September 30, 2018; (ii) suspend the accrual of interest on the 2011 HealthCor Notes and the 2012 HealthCor Notes for periods after September 30, 2018; (iii) provide for the potential earlier repayment of the 2011 HealthCor Notes and the 2012 HealthCor Notes by the Company, 120 calendar days following a written demand for payment by the holder of such notes; provided, however, that such written demand may not be given prior to the twelve-month anniversary of the date on which the obligations of the Company under the PDL Credit Agreement are repaid in full; (iv) cancel the 2011 HealthCor Warrants; (v) provide for the seniority of the 2011 HealthCor Notes and the 2012 HealthCor Notes in right of payment over notes subsequently issued pursuant to the Purchase Agreement, including the 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes; (vi) amend the terms of the 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes to reflect the seniority in payment of the 2011 HealthCor Notes and 2012 HealthCor Notes; and (vii) reduce the number of shares of Common Stock that the Company must at all times have authorized and reserved for the purpose of issuance upon conversion of the notes issued pursuant to the HealthCor Purchase Agreement (collectively, the “Notes”) and exercise of the warrants issued pursuant to the HealthCor Purchase Agreement (collectively, the “Warrants”), from at least 120% of the aggregate number of shares of Common Stock then issuable upon full conversion of the Notes and exercise of the Warrants to at least 100% of such aggregate number of shares. In addition, on July 10, 2018, along with PDL, HealthCor, the 2015 Investors and the February 2018 Investors, we entered into a Second Amendment to the Subordination and Intercreditor Agreement, to amend the Subordination and Intercreditor Agreement dated as of September 26, 2015, as amended to provide that, in the event of a sale of the Company’s hospital assets, after the net proceeds are first applied to repay obligations under the PDL Credit Agreement, as amended, until paid in full, up to the next $5,000,000 of such net proceeds may be retained by the Company for working capital purposes before all remaining net proceeds are then applied to repay the obligations under the Notes in accordance with the priorities set forth in the HealthCor Purchase Agreement and the Notes. On July 13, 2018, we entered into the Tenth Amendment to the HealthCor Purchase Agreement with HealthCor, the 2015 Investors, the February 2018 Investors and certain investors (all of which are directors of the Company) (such additional investors, the “July 2018 Investors”), pursuant to which we sold and issued convertible secured promissory notes for an aggregate of $1,000,000 to the July 2018 Investors with a conversion price per share equal to $0.05 (subject to adjustment as described therein) (the “Tenth Amendment Notes”). As provided by the Tenth Amendment, the Tenth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Tenth Amendment Notes. The Tenth Amendment Notes have a maturity date of July 12, 2028. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. As of December 31, 2019, the underlying shares of our Common Stock related to the Tenth Amendment Notes totaled approximately 24,000,000 to the July 2018 Investors. On March 27, 2019, we entered into the Eleventh Amendment to the HealthCor Purchase Agreement, as amended, with HealthCor, the 2015 Investors, the February 2018 Investors and the July 2018 Investors, pursuant to which all parties agreed to amend and restate Section 5.3 Minimum Cash Balance (“Section 5.3”), wherein the requirement of maintaining a minimum cash balance has been removed and any breach of Section 5.3 has been waived in perpetuity. On May 15, 2019, we entered into the Twelfth Amendment to HealthCor Purchase Agreement with HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and an investor (a member of our board of directors) (such additional investor, the “2019 Investor”), pursuant to which we sold and issued a convertible secured promissory note for $50,000 to the 2019 Investor with a conversion price per share equal to $0.03 (subject to adjustment as described therein) (the “Twelfth Amendment Note”). As provided by the Twelfth Amendment, the Twelfth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Twelfth Amendment Notes. The Twelfth Amendment Notes have a maturity date of May 15, 2029. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. As of December 31, 2019, the underlying shares of our Common Stock related to the Twelfth Amendment Note totaled approximately 56,000 to the 2019 Investor. Subsequent to December 31, 2019, the Company and HealthCor entered into a Thirteenth Amendment to the HealthCor Purchase Agreement. See Note 14 Subsequent Events. Accounting Treatment When issuing debt or equity securities convertible into common stock at a discount to the fair value of the common stock at the date the debt or equity financing is committed, a company is required to record a beneficial conversion feature (“BCF”) charge. We had three separate issuances of equity securities convertible into common stock that qualify under this accounting treatment, (i) the 2011 HealthCor Notes, (ii) the 2012 HealthCor Notes and (iii) the 2014 HealthCor Notes. Because the conversion option and the 2011 HealthCor Warrants on the 2011 HealthCor Notes were originally classified as a liability when issued due to the down round provision and the removal of the provision requiring liability treatment, and subsequently reclassified to equity on December 31, 2011 when the 2011 HealthCor Notes were amended, only the accrued interest capitalized as payment in kind (‘‘PIK’’) since reclassification qualifies under this accounting treatment. We recorded an aggregate of $4,413,123 and $3,776,287 in interest for the years ended December 31, 2019 and 2018, respectively, related to these transactions. face amount of the 2012 HealthCor Notes, 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes and all accrued PIK interest also qualify for BCF treatment as discussed above. Under the accounting standards, we determined that the restructuring of the HealthCor notes, pursuant to the terms of the Ninth Amendment, resulted in a troubled debt restructuring. As the future cash flows were greater than the carrying amount of the debt at the date of the amendment, we accounted for the change prospectively using the new effective interest rate. During the years ended December 31, 2019 and 2018, we recorded a BCF of $6,390 and $133,220, respectively. The BCF was recorded as a charge to debt discount and a credit to additional paid in capital, with the debt discount, using the effective interest method, amortized to interest expense over the term of the notes. As Warrants were issued with the Fifth Amendment Notes, the proceeds were allocated to the instruments based on relative fair value as the warrants did not contain any features requiring liability treatment and therefore were classified as equity. The value allocated to the Fifth Amendment Warrants was $1,093,105, which was recorded as debt discount with the credit to additional paid in capital. We recorded an aggregate of $34,672 and $29,239 in interest for the years ended December 31, 2019 and 2018, respectively, related to the Fifth Amendment Notes and Fifth Amendment Warrants. The Sixth Amendment Warrants also did not contain features requiring liability accounting and were recorded at fair value on the date of issuance with the offsetting credit recorded in equity. The value allocated to the Ninth Amendment Warrant was $378,000, which was recorded as debt costs with the credit to additional paid in capital. We recorded an aggregate of $57,803 and $57,803 in interest expense for the years ended December 31, 2019 and 2018, respectively. The Eighth Amendment Warrants also did not contain features requiring liability accounting and were recorded at fair value on the date of issuance with the offsetting credit recorded in equity. The value allocated to the Eighth Amendment Warrants was $10,707, which was recorded as interest expense at December 31, 2019. |
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT | 12 Months Ended |
Dec. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
JOINT VENTURE AGREEMENT | NOTE 13 – JOINT VENTURE AGREEMENT On November 16, 2009, we entered into a Master Investment Agreement (the “Rockwell Agreement”) with Rockwell Holdings I, LLC, a Wisconsin limited liability (“Rockwell”). Under the terms of the Rockwell Agreement, we used funds from Rockwell to fully implement the CareView System™ in Hillcrest Medical Center in Tulsa, Oklahoma (“Hillcrest”) and Saline Memorial Hospital in Benton, Arkansas (“Saline”) (the “Project Hospital(s)”). CareView-Hillcrest, LLC and CareView-Saline, LLC were created as the operating entities for the Project Hospitals under the Rockwell Agreement (the “Project LLC(s) ”). On January 31, 2017, under the terms of the Rockwell Agreement, wherein we have the option to purchase Rockwell’s interest in the Project LLCs, we exercised that right by entering into a Settlement and LLC Interest Purchase Agreement with Rockwell (the “Settlement Agreement). Pursuant to the terms of the Settlement Agreement, we paid Rockwell the aggregate amount of $1,213,786 by the issuance of a promissory note to Rockwell for $1,113,786 (the “Rockwell Note”) and a cash payment of $100,000. Pursuant to the terms of the Rockwell Note, we will make quarterly principal payments of $100,000, with each payment being made on the last day of each calendar quarter beginning with the first payment date of March 31, 2017 and continuing on the last business day of each subsequent calendar quarter through September 30, 2019. We were not in default of any conditions under the Settlement Agreement as of December 31, 2017. The final payment due on December 31, 2019 was to be a balloon payment of $13,786 representing the remaining principal balance plus all accrued and unpaid interest. As previously reported in our Current Report on Form 8-K filed with the SEC on February 5, 2018, on February 2, 2018 the Company entered into an amendment (the “Rockwell Note Amendment”) to the Company’s Promissory Note to Rockwell Holdings I, LLC (“Rockwell”) dated as of January 31, 2017 (the “Rockwell Note”), pursuant to which Rockwell agreed to defer $50,000 of each $100,000 quarterly payment due under the Rockwell Note from January 1, 2018 through the termination of the Modification Period, April 30, 2020. On December 31, 2019, the Company and Rockwell entered into a Second Amendment to the Rockwell Note (the “Second Rockwell Note Amendment”) pursuant to which Rockwell agreed to extend the term of the Rockwell Note by one year, to December 31, 2020, and agreed to extend the time to make the quarterly payment that would otherwise be due on December 31, 2019 to January 31, 2020. As additional consideration to Rockwell for entering into the Rockwell Agreement, we granted Rockwell Warrants to purchase 1,151,206 shares of our Common Stock on the date of the Rockwell Agreement, and, using the Black-Scholes Model, valued the Warrants at $1,124,728 (the “Project Warrant”), which amount was fully amortized at December 31, 2015. Pursuant to the terms of the Settlement Agreement, the expiration date of the Project Warrant was extended from November 16, 2017 to November 16, 2022. All other provisions of the Project Warrant remained unchanged. At the time of the extension, the Project Warrant were revalued resulting in a $11,512 increase in fair value, which has been recorded as non-cash costs included in general and administration expense in the accompanying consolidated financial statements. Effective February 2, 2018, pursuant to the terms of the PDL Modification Agreement, we entered into an amendment to the Project Warrant wherein the Project Warrant’s exercise price was changed from $0.52 to $0.05, resulting in a $13,814 increase in fair value, this transaction was recorded as non-cash costs included in general and administration expense in the consolidated financial statements for the year ended December 31, 2018. Subsequent to December 31, 2019, the Company and Rockwell entered into a Third Amendment to the Rockwell Note (see NOTE 14 for further details). |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS On January 17, 2020, the Company, the Borrower, the Subsidiary Guarantor and the Lender entered into an Eighteenth Amendment to Modification Agreement (the “Eighteenth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and January 28, 2020 (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, and December 31, 2019 would be deferred until January 28, 2020 (the end of the extended Modification Period) and that such deferrals would be a Covered Event. On January 28, 2020, the Company, the Borrower, the Subsidiary Guarantor and the Lender entered into a Nineteenth Amendment to Modification Agreement (the “Nineteenth Modification Agreement Amendment”), pursuant to which the parties agreed to amend the Modification Agreement to provide that the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and (i) April 30, 2020 (provided that Borrower obtains at least $600,000 in cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt subordinated to the Tranche One Loan (as defined in the Credit Agreement) pursuant to the terms of the Intercreditor Agreement (as defined in the Credit Agreement) on or prior to February 11, 2020) or (ii) February 11, 2020 (if Borrower has not obtained such cash proceeds by such date) (with each such date permitted to be extended by the Lender in its sole discretion); and that the Borrower’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, and March 31, 2020 would be deferred until the end of the extended Modification Period (but with respect to the March 31, 2020 interest payment, such payment would be deferred only in the event that the end of the extended Modification Period is April 30, 2020 rather than February 11, 2020; otherwise the Borrower will make the interest payment due under the Credit Agreement on March 31, 2020), and that such deferrals would be a Covered Event. On January 31, 2020, the Company and Rockwell entered into a Third Amendment to the Rockwell Note (the “Third Rockwell Note Amendment”), pursuant to which Rockwell agreed to extend the time to make the quarterly payment that would otherwise be due on December 31, 2019 from January 31, 2020 to February 10, 2020. On February 6, 2020, the Company, the Borrower, the Lender (in its capacity as administrative agent and lender) and the Tranche Three Lenders entered into a Sixth Amendment to Credit Agreement (the “Sixth Credit Agreement Amendment”), pursuant to which the parties agreed to amend the Credit Agreement to, among other things, (i) provide for additional funding under the Tranche Three Loan, in the aggregate principal amount of $500,000, from the Tranche Three Lenders (the “Additional Tranche Three Loan”), with a maturity date of October 7, 2020 (the fifth anniversary of the funding date of the Tranche One Loan (as defined in the Credit Agreement)), with outstanding borrowings bearing interest at the rate of 15.5% per annum, payable quarterly in arrears (subject to the terms of the Modification Agreement, as amended), and with payment of the Additional Tranche Three Loan and any other Obligations (as defined in the Credit Agreement) incurred in connection with the Additional Tranche Three Loan subordinated and subject in right and time of payment to the Payment in Full (as defined in the Credit Agreement) of the Tranche One Loan and any other Obligations incurred in connection with the Tranche One Loan, to the extent and in the manner set forth in the Credit Agreement; and (ii) provide for the issuance of the Thirteenth Amendment Supplemental Closing Note. Also on February 6, 2020, upon the execution of the Sixth Credit Agreement Amendment, (i) the Borrower (CareView Communications, Inc., a Texas corporation and a wholly owned subsidiary of the Company) borrowed the Additional Tranche Three Loan and issued to the Tranche Three Lenders term notes in the aggregate principal amount of $500,000, payable in accordance with the terms of the Credit Agreement (the “Additional Tranche Three Term Notes”), $250,000 from Mr. Johnson and $250,000 from Dr. Higgins, and (ii) the Company issued a warrant for the purchase of 1,000,000 shares of Common Stock, with an exercise price per share equal to $0.01 (subject to adjustment as described therein) and expiration date of February 6, 2030 (the “Additional Tranche Three Loan Warrant”), to Dr. Higgins in connection with his Additional Tranche Three Loan. Mr. Johnson declined to be issued an Additional Tranche Three Loan Warrant. Mr. Johnson is our Chief Executive Officer, President, Secretary and Treasurer and is one of our directors. Dr. Higgins is one of our directors. On February 6, 2020, we entered into a Thirteenth Amendment to Note and Warrant Purchase Agreement (the “Thirteenth Amendment”) with the Existing Investor listed in Annex I to the Thirteenth Amendment (the “Thirteenth Amendment Investor”) and with the HealthCor Parties and certain additional Existing Investors (solely in their capacity as Majority Holders (acting together with the Thirteenth Amendment Investor) approving the Thirteenth Amendment and not as investors), pursuant to which (i) we sold and issued, for $100,000 in cash, to the Thirteenth Amendment Investor on such date an additional note in the initial principal amount of $100,000, with a conversion price per share equal to $0.01 (subject to adjustment as described therein) and a maturity date of February 5, 2030 (the “Thirteenth Amendment Supplemental Closing Note”); and (ii) the Majority Holders consented to the issuance of the Additional Tranche Three Loan Warrant in connection with the Additional Tranche Three Loan (each as defined below). The Thirteenth Amendment Investor is one of our directors. The Purchase Agreement and Thirteenth Amendment provide that we grant to the Thirteenth Amendment Investor a security interest in our assets as collateral for payment of the Thirteenth Amendment Supplemental Closing Note, evidenced by the Amended and Restated Security Agreement and by the Amended and Restated IP Security Agreement. The Purchase Agreement and the Thirteenth Amendment also provide that we grant registration rights to the Thirteenth Amendment Investor for the Common Stock into which the Thirteenth Amendment Supplemental Closing Note may be converted as provided for by the Registration Rights Agreement. On March 4, 2020, we entered into the Fourth Amendment to Commercial Lease Agreement (the “Lease Extension”), wherein we extended the Lease through August 31, 2025. The Lease Extension contains a renewal provision under which we may renew the Lease for an additional five-year period under the same terms and conditions. We believe that these premises are adequate and sufficient for our current needs. In December 2019, a novel strain of coronavirus (COVID-19) was identified in Wuhan, China, and has subsequently spread to other regions of the world, and has resulted in increased travel restrictions, business disruptions and emergency quarantine measures across the world including the United States. The extent to which COVID-19 will negatively impact our business results is highly uncertain and cannot be accurately predicted. Management believes that the COVID-19 outbreak and the measures taken to control it may have a large negative impact on economic activities across the world and the United States. As such, these uncertainties may impede our ability to conduct our daily operations and could materially and adversely affect our business, financial condition and results of operations in the foreseeable future. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “Act”) was enacted. The CARES Act is an approximately $2 trillion emergency economic stimulus package in response to the Coronavirus outbreak, which among other things contains numerous income tax provisions. Some of these tax provisions are expected to be effective retroactively for years ending before the date of enactment. The Company is currently evaluating the implications of the Act and its impact on the financial statements and related disclosures has not yet been determined. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. We maintain cash at financial institutions that at times may exceed federally insured limits. |
Restricted Cash | Restricted Cash At December 31, 2019 and 2018, we had $0 and $750,000 included in restricted cash in other assets on the consolidated balance sheet. |
Trade Accounts Receivable | Trade Accounts Receivable Trade accounts receivable are customer obligations due under normal trade terms. We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Trade accounts receivable past due more than 90 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluations, results of collection efforts, and specific circumstances of the customer. Recoveries of accounts previously written off are recorded as reductions of bad debt expense when received. At December 31, 2019 and 2018, an allowance for doubtful accounts of $0 and $7,588, respectively, was recorded. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs are charged to operating expense as incurred. We include Network Equipment in fixed assets upon receipt and begin depreciating the Network Equipment when such equipment passes our incoming inspection and is available for use. We attribute no salvage value to the Network Equipment and depreciation is computed using the straight-line method based on the estimated useful life of seven years. Depreciation of office and test equipment, warehouse equipment and furniture is computed using the straight-line method based on the estimated useful lives of the assets, generally three years for office and test equipment, and five years for warehouse equipment and furniture. |
Allowance for System Removal | Allowance for System Removal We would remove the CareView System from customer premises due to a number of factors; including, but not limited to, collection/revenue performance issues and contract expiration/non-renewal. We regularly evaluate the installed CareView Systems for such factors and an allowance is set up based on the estimated cost of removal. At December 31, 2019 and 2018, an allowance of $152,800 and $236,650, respectively, was recorded in other assets in the accompanying consolidated financial statements. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Carrying values of property and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Such events or circumstances include, but are not limited to: ● Significant declines in an asset’s market price; ● Significant deterioration in an asset’s physical condition; ● Significant changes in the nature or extent of an asset’s use or operation; ● Significant adverse changes in the business climate that could impact an asset’s value, including adverse actions or assessments by regulators; ● Accumulation of costs significantly in excess of original expectations related to the acquisition or construction of an asset; ● Current-period operating or cash flow losses combined with a history of such losses or a forecast that demonstrates continuing losses associated with an asset’s use; and ● Expectations that it is more likely than not that an asset will be sold or otherwise disposed of significantly before the end of our previously estimated useful life. If impairment indicators are present, we determine whether an impairment loss should be recognized by testing the applicable asset or asset groups’ carrying value for recoverability. This test requires long-lived assets to be grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, the determination of which requires judgment. We estimate the undiscounted future cash flows expected to be generated from the use and eventual disposal of the assets and compare that estimate to the respective carrying values in order to determine if such carrying values are recoverable. This assessment requires the exercise of judgment in assessing the future use of and projected value to be derived from the eventual disposal of the assets to be held and used. Assessments also consider changes in asset utilization, including the temporary idling of capacity and the expected timing for placing this capacity back into production. If the carrying value of the asset is not recoverable, then a loss is recorded for the difference between the assets’ fair value and respective carrying value. The fair value of the asset is determined using an “income approach” based upon a forecast of all the expected discounted future net cash flows associated with the subject assets. Some of the more significant estimates and assumptions include market size and growth, market share, projected selling prices, manufacturing cost and discount rate. Our estimates are based upon our historical experience, our commercial relationships, market conditions and available external information about future trends. We believe our current assumptions and estimates are reasonable and appropriate; however, unanticipated events and changes in market conditions could affect such estimates resulting in the need for an impairment charge in future periods. During the years ended December 31, 2019 and 2018, no impairment was recognized. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Costs regarding the development of software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. We did not capitalize any such costs during the years ended December 31, 2019 and 2018. |
Intellectual Property | Intellectual Property We capitalize certain costs of developing software upon the establishment of technological feasibility and prior to the availability of the product for general release to customers for our CareView System in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Capitalized costs are reported at the lower of unamortized cost or net realizable value and are amortized over the estimated useful life of the CareView System not to exceed five years. Additionally, we test our intangible assets for impairment whenever circumstances indicate that their carrying value may not be recoverable. No impairment was recorded during the years ended December 31, 2019 and 2018. During the years ended December 31, 2019 and 2018, we capitalized no additional intellectual property costs. |
Patents and Trademarks | Patents and Trademarks We amortize our intangible assets with a finite life on a straight-line basis, over 10 years for trademarks and 20 years for patents. We begin amortization of these costs on the date patents or trademarks are awarded. |
Derivative Financial Instruments | Derivative Financial Instruments Derivatives are recorded on the balance sheet at fair value and changes in fair value are recorded in earnings at each reporting date in accordance with GAAP. See Fair Value of Financial Instruments, |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates our fair value because of the short-term maturity of such instruments, and they are considered Level 1 assets under the fair value hierarchy. We have elected not to carry our debt instruments at fair value. Interest rates that are currently available to us for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of our short and long-term debt and would be considered Level 3 inputs under the fair value hierarchy. We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: Level 1 Level 2 Level 3 The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the warrant liability discussed in NOTE 4. The fair value of this warrant liability is included in other current liabilities on the accompanying consolidated financial statements. At December 31, 2019 and 2018, we had no financial assets and liabilities reported at fair value. The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the year ended December 31: Fair Value Measurements Using 2019 2018 Balance, beginning of period $ $ (11,157 ) Issuances of derivative liabilities — — Change in fair value of warrant liability — 11,157 Transfers in and/out of Level 3 — — Balance, end of period $ — $ — The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balances of the Level 3 financial instrument presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with GAAP, we recognize the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. We recognize both interest and penalties related to uncertain tax positions as part of the income tax provision. |
Revenue Recognition | Revenue Recognition We adopted Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) on January 1, 2018 using the full retrospective transition method for recognizing revenue. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of our services to our customers and will provide financial statement readers with enhanced disclosures. We have employed the practical expedient discussed in ASC 606-10-55-18 related to invoicing as we have the right to consideration from our customers in the amount that corresponds directly with the value to the customer of our performance completed to date and therefore we recognize revenue upon invoicing as further discussed below. Further, for those customers for which we are required to collect sales taxes, we record such sales taxes on a net basis which has no effect on the amount of revenue or expenses recognized as the sales taxes are a flow through to the taxing authority. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We offer CareView’s services through a subscription-based contract with each healthcare facility for a standard term of three to five years and have determined we have one performance obligation for our services. We begin to bill monthly subscription fees to the healthcare facility upon official acceptance of the CareView System by the healthcare facility which is when the service is initiated. When services begin, the customer simultaneously receives the use and benefit of that service and we recognize the revenue over time based on the service completed to date as the amount invoiced each month. The contract requires the healthcare facility to pay us the subscription fee monthly. During the term of the contract, we provide continuous monitoring of the CareView System and are required to maintain and service all CareView System equipment. If the healthcare facility requires additional services, the contract is amended accordingly. The company evaluated the disaggregation criteria of ASC 606 and determine that based on the nature, amount, timing and uncertainty of our service revenues, there were no material differences that merited further disaggregation as compared to the total revenue as reported in the accompanying consolidated statements of operations. We defer and capitalize all costs associated with the installation of the CareView System into a healthcare facility until the CareView System is fully operational and accepted by the healthcare facility. Installation costs are specifically identifiable based on the amounts we are charged from third party installers or directly identifiable labor hours incurred for each installation. Upon acceptance, the associated costs are expensed on a straight-line basis over the life of the contract with the healthcare facility. These costs are included in network operations on the accompanying consolidated statements of operations. The table below details the activity in these deferred installation costs during the years ended December 31, 2019 and 2018, including in other assets in the accompanying consolidated balance sheet. For the Years Ended 2019 2018 Balance, beginning of period $ 134,686 $ 215,548 Additions 47,472 61,596 Transfer to expense (100,970 ) (142,458 ) Balance, end of period $ 81,188 $ 134,686 From time to time, we enter into contracts with healthcare facilities wherein full payment of the contractual obligation is paid in advance (“PIA Contracts”). The transaction is recorded as a contract liability and is included in other current liabilities in the accompanying consolidated balance sheet, with revenue recorded and the contract liability reduced as services are provided under the contract. The table below details this activity during the years ended December 31, 2019 and 2018. For the Years Ended 2019 2018 Balance, beginning of period $ 58,559 $ 17,430 Additions 389,836 192,506 Transfer to revenue (192,997 ) (151,377 ) Balance, end of period $ 255,398 $ 58,559 As of December 31, 2019, future transfers to revenue are as follows: Years Ending December 31, Amount 2020 $ 137,883 2021 73,447 2022 44,068 $ 255,398 Based on our contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, except in the case of PIA Contracts as detailed above, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional and are reported accordingly on our consolidated financial statements. |
Accounting Standard Update 2016-02, Leases | Accounting Standard Update 2016-02, Leases Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has an operating lease primarily consisting of office space with remaining lease term of 12 months. We adopted Accounting Standard Update (“ASU”) 2016-02, Leases under the modified retrospective transition method for all long-term operating leases as of January 1, 2019. The cumulative impact of the adoption of ASU 2016-02 to the condensed consolidated balance sheet as of January 1, 2019 was as follows: Operating Lease Asset $ 236,959 Operating Lease Liability-ST $ 166,955 Operating Lease Liability-LT $ 83,477 The adoption of ASU 2016-02 did not result in an adjustment to retained earnings. The adoption of ASU-2016-02 represents a change in accounting principle. |
Earnings Per Share | Earnings Per Share We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants to purchase our Common Stock (the “Warrants”) and convertible debt. Potential common shares totaling approximately 161,000,000 and 146,000,000 at December 31, 2019 and 2018, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. |
Stock Based Compensation | Stock Based Compensation We recognize compensation expense for all share-based payments granted and amended based on the grant date fair value estimated in accordance with GAAP. Compensation expense is generally recognized on a straight-line basis over the employee’s requisite service period based on the award’s estimated lives for fixed awards with ratable vesting provisions. |
Debt Discount Costs | Debt Discount Costs Costs incurred with parties who are providing long-term financing, with Warrants issued with the underlying debt, are reflected as a debt discount based on the relative fair value of the debt and Warrants. These discounts are generally amortized over the life of the related debt, using the effective interest rate method or other methods approximating the effective interest method. Additionally, convertible debt issued with a beneficial conversion feature is recorded at a discount based on the difference in the effective conversion price and the fair value of the Company’s stock on the date of issuance, if any. Outstanding debt is presented net of any such discounts on the accompanying consolidated financial statements. |
Deferred Debt Issuance and Debt Financing Costs | Deferred Debt Issuance and Debt Financing Costs Costs incurred through the issuance of Warrants to parties who are providing long-term financing availability, which includes revolving credit lines, are reflected as deferred debt issuance based on the fair value of the Warrants issued. Costs incurred with third parties related to issuance of debt are recorded as deferred financing costs. These costs are generally amortized over the life of the financing instrument using the effective interest rate method or other methods approximating the effective interest method. Amounts associated with our senior secured convertible notes are netted with the outstanding debt on the accompanying consolidated financial statements while amount associated with credit facilities are presented in other assets on the accompanying consolidated statements of operations. |
Shipping and Handling Costs | Shipping and Handling Costs We expense all shipping and handling costs as incurred. These costs are included in network operations on the accompanying consolidated statements of operations. |
Advertising Costs | Advertising Costs We consider advertising costs as costs associated with the promotion of our products through the various media outlets and trade shows. We expense all advertising costs as incurred. Our advertising expense for the years ended December 31, 2019 and 2018 totaled approximately $30,000 and $103,000, respectively. |
Concentration of Credit Risks and Customer Data | Concentration of Credit Risks and Customer Data During 2019 one customer comprised $1,538,193 or 25% of our revenue, while no other customer comprised more than 10%. During 2018 one customer comprised $1,532,823 or 25% of our revenue, while no other customer comprised more than 10%. |
Use of Estimates | Use of Estimates Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to contingencies, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
Recent Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements | Recent Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets while recognizing expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. In July 2018, the FASB amended the new leases standard and issued ASU 2018-11, Leases, (Topic 842): Targeted Improvements to give entities another option for transition and to provide lessors with a practical expedient. We adopted ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Comparative financial information were not adjusted and will continue to be reported under ASC 840. We also elected the transition relief package of practical expedients and as a result we did not assess (1) whether existing or expired contracts contain leases, (2) lease classification for any existing or expired leases, and (3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less. We elected not to separate lease components from non-lease components for our specified asset classes. Additionally, the adoption of the new standard resulted in increased disclosure requirements in our quarterly and annual filings. |
Reclassification | Reclassification Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of summary of changes in fair value associated with the Level 3 liabilities | The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the year ended December 31: Fair Value Measurements Using 2019 2018 Balance, beginning of period $ $ (11,157 ) Issuances of derivative liabilities — — Change in fair value of warrant liability — 11,157 Transfers in and/out of Level 3 — — Balance, end of period $ — $ — |
Schedule of deferred installation costs | The table below details the activity in these deferred installation costs during the years ended December 31, 2019 and 2018, including in other assets in the accompanying consolidated balance sheet. For the Years Ended 2019 2018 Balance, beginning of period $ 134,686 $ 215,548 Additions 47,472 61,596 Transfer to expense (100,970 ) (142,458 ) Balance, end of period $ 81,188 $ 134,686 |
Schedule of contract liability activity | The table below details this activity during the years ended December 31, 2019 and 2018. For the Years Ended 2019 2018 Balance, beginning of period $ 58,559 $ 17,430 Additions 389,836 192,506 Transfer to revenue (192,997 ) (151,377 ) Balance, end of period $ 255,398 $ 58,559 |
Schedule of future transfers to revenue | As of December 31, 2019, future transfers to revenue are as follows: Years Ending December 31, Amount 2020 $ 137,883 2021 73,447 2022 44,068 $ 255,398 |
Schedule of the impact of ASU 2016-02 | The cumulative impact of the adoption of ASU 2016-02 to the condensed consolidated balance sheet as of January 1, 2019 was as follows: Operating Lease Asset $ 236,959 Operating Lease Liability-ST $ 166,955 Operating Lease Liability-LT $ 83,477 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of warrant activity | A summary of our Warrants activity and related information follows: Number of Shares Under Warrant Range of Warrant Price Per Share Weighted Average Exercise Price Weighted Average Remaining Contractual Life Balance at December 31, 2017 30,054,389 $0.33-$1.65 $0.85 4.6 Granted 512,500 $0.05 $.05 9.2 Canceled (11,782,859 ) Expired (2,500,000 ) Balance at December 31, 2018 16,284,030 $0.05-$1.10 $0.49 4.9 Granted 250,000 $0.03 $.03 9.4 Canceled — Expired — Balance at December 31, 2019 16,534,030 $0.03-$1.10 $0.49 4.4 Vested and Exercisable at December 31, 2019 16,534,030 |
Schedule of stock option activity | A summary of our Option activity and related information follows: Number of Weighted Weighted Aggregate Balance at December 31, 2017 22,660,459 $ 0.27 8.1 $ — Expired (711,835 ) Canceled (248,331 ) Balance at December 31, 2018 21,700,293 $ 0.26 7.1 $ — Expired (1,106,334 ) Canceled (69,167 ) Balance at December 31, 2019 20,524,792 $ 0.25 6.3 $ — Vested and Exercisable at December 31, 2019 18,087,789 $ 0.27 6.0 $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax reconciliation | The differences between the actual income tax benefit and the amount computed by applying the statutory federal tax rate (21% for the year ended December 31, 2019 and 2018) to the loss before taxes are as follows: Years Ended December 31, 2019 2018 Expected income tax benefit at statutory rate $ (2,969,493 ) $ (3,374,011 ) Debt discount amortization 683,911 552,382 Permanently disallowed interest 223,586 293,975 Other permanent differences 10,264 13,359 State income tax benefit, net of tax effect at state statutory rate — — Deferred pool true-ups/corrections related to: Net operating losses — — Other 65,226 (57,073 ) Change in federal tax rate — — Change in valuation account 1,986,506 2,571,368 Income tax expense (benefit) $ — $ — |
Schedule of components of deferred tax assets | The components of the deferred tax assets and liabilities are as follows: December 31, 2019 2018 Deferred Tax Assets: Tax benefit of net operating loss carry-forward $ 18,162,329 $ 17,794,637 Accrued interest 7,538,930 6,142,738 Stock based compensation 1,265,290 1,224,202 Amortization of intangible assets 100,550 147,604 Depreciation of property and equipment 393,935 390,632 Accrued expenses and other liabilities 60,192 73,920 Research and development credit carry-forward 29,084 29,084 Donations 5,947 6,052 Asset reserve 237,527 — Bad debt allowance 1,591 — Beneficial conversion feature debt discount (1,840,060 ) (1,840,060 ) Total deferred tax assets 25,955,315 23,968,809 Valuation allowance for deferred tax assets (25,955,315 ) (23,968,809 ) Deferred tax assets, net of valuation allowance $ — $ — |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of other current assets | Other current assets consist of the following: December 31, 2019 2018 Prepaid equipment $ 102,215 $ 1,394,044 Other prepaid expenses 109,185 — Other current assets 9,064 14,382 TOTAL OTHER CURRENT ASSETS $ 220,464 $ 1,408,426 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consist of the following: December 31, 2019 2018 Network equipment $ 12,424,248 $ 12,302,328 Office equipment 207,608 293,709 Vehicles 217,004 217,004 Test equipment 197,090 175,603 Furniture 91,341 90,827 Warehouse equipment 9,524 9,524 Leasehold improvements 5,121 5,121 13,151,936 13,094,116 Less: accumulated depreciation (11,173,916 ) (10,607,450 ) TOTAL PROPERTY AND EQUIPMENT $ 1,978,020 $ 2,486,666 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consist of the following: December 31, 2019 Cost Accumulated Net Patents and trademarks $ 1,070,871 $ 243,702 $ 827,169 Other intangible assets 63,509 59,996 3,513 TOTAL INTANGIBLE ASSETS $ 1,134,380 $ 303,698 $ 830,682 December 31,2018 Cost Accumulated Amortization Net Patents and trademarks $ 932,149 $ 192,995 $ 739,154 Other intangible assets 63,508 56,522 6,986 TOTAL INTANGIBLE ASSETS $ 995,657 $ 249,517 $ 746,140 |
Schedule of other assets | Other assets consist of the following: December 31, 2019 Cost Accumulated Amortization Net Deferred installation costs $ 1,288,156 $ 1,206,968 $ 81,188 Prepaid license fee 249,999 136,611 113,388 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 1,584,279 $ 1,343,579 $ 240,700 December 31,2018 Cost Accumulated Amortization Net Deferred installation costs $ 1,810,414 $ 1,675,728 $ 134,686 Prepaid license fee 249,999 120,217 129,782 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 2,106,537 $ 1,795,945 $ 310,592 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of other current liabilities | Other current liabilities consist of the following: December 31, 2019 2018 Accrued interest $ 3,751,061 $ 750,548 Allowance for system removal 152,800 236,650 Accrued paid time off 112,176 129,773 Deferred commission 139,041 117,206 Accrued rent expense 22,161 68,780 Deferred revenue 255,398 58,559 Accrued taxes 29,309 23,156 Insurance Premium Financing 19,360 — Other accrued liabilities 24,199 31,568 TOTAL OTHER CURRENT LIABILITIES $ 4,505,505 $ 1,416,240 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future debt payments | As of December 31, 2019, future debt payments due are as follows: Years Total Note Payable Senior (1) Notes Payable 2020 $ 20,563,786 $ 20,563,786 $ — $ — 2021 45,966,949 — — 45,966,949 2022 10,643,186 — — 10,643,186 2023 — — — — Thereafter 24,919,513 — 24,919,513 — Total $ 102,093,434 $ 20,563,786 $ 24,919,513 $ 56,610,135 (1) Senior Secured Convertible Notes are included on the accompanying consolidated financial statements as $20,599,475, which represents this amount less debt discount of $4,320,038. (2) Senior Secured Notes are included on the accompanying consolidated financial statements as $50,835,220, which represents the 2021 and 2022 amount due less debt discount of $5,774,915. |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) | 1 Months Ended | 12 Months Ended |
Aug. 31, 2019USD ($) | Dec. 31, 2019USD ($)Number | |
Skilled Nursing Home Market [Member] | ||
Number of beds in market | 2,000,000 | |
Assisted Living Center Market [Member] | ||
Number of beds in market | 3,000,000 | |
CareView Connect [Member] | ||
Number of pilot contracts | 2 | |
Fully executed contract | $ | $ 1,464 | |
Write-off of inventory | $ | $ 1,131,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Significant Other Unobservable Inputs (Level 3) [Member] | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Change in Fair Value of Level 3 Liabilities | |
Balance, beginning of period | $ (11,157) |
Change in fair value of warrant liability | $ 11,157 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Balance, beginning of period | $ 134,686 | $ 215,548 |
Additions | 47,472 | 61,596 |
Transfer to expense | (100,970) | (142,458) |
Balance, end of period | $ 81,188 | $ 134,686 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Balance, beginning of period | $ 58,559 | $ 17,430 |
Additions | 389,836 | 192,506 |
Transfer to revenue | (192,997) | (151,377) |
Balance, end of period | $ 255,398 | $ 58,559 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Total | $ 255,398 | $ 58,559 | $ 17,430 |
2020 [Member] | |||
Total | 137,883 | ||
2021 [Member] | |||
Total | 73,447 | ||
2022 [Member] | |||
Total | $ 44,068 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | Dec. 31, 2019 | Jan. 02, 2019 |
Right to Use Asset | $ 85,942 | |
Right to Use Liability-ST | $ 91,363 | |
ASU 2016-02 [Member] | ||
Right to Use Asset | $ 236,959 | |
Right to Use Liability-ST | 166,955 | |
Right to Use Liability-LT | $ 83,477 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Allowance for system removal | $ 152,800 | $ 236,650 |
Advertising costs | $ 30,000 | $ 103,000 |
Anti-dilutive common share equivalents excluded from EPS calculation | 161,000,000 | 146,000,000 |
Restricted cash | $ 0 | $ 750,000 |
Allowance for doubtful accounts | 0 | 7,588 |
Revenues, net | $ 6,294,122 | $ 6,096,153 |
Concentration [Member] | Revenue [Member] | One Customer [Member] | ||
Concentration risk percentage | 25.00% | 25.00% |
Revenues, net | $ 1,538,193 | $ 1,532,823 |
Trademarks [Member] | ||
Amortization period for intangible assets | 10 years | |
Patents [Member] | ||
Amortization period for intangible assets | 20 years | |
Network Equipment [Member] | ||
Estimated useful life of property and equipment | 7 years | |
Office And Test Equipment [Member] | ||
Estimated useful life of property and equipment | 3 years | |
Warehouse Equipment And Furniture [Member] | ||
Estimated useful life of property and equipment | 5 years | |
Office Space [Member] | ||
Estimated useful life of property and equipment | 12 months |
GOING CONCERN, LIQUIDITY AND _2
GOING CONCERN, LIQUIDITY AND MANAGMENTS PLAN (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Joint Venture Agreement | ||
Cash and cash equivalents | $ 269,741 | $ 1,200,725 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of shares under warrant | ||
Warrants outstanding, beginning | 16,284,030 | 30,054,389 |
Warrants granted | 250,000 | 512,500 |
Warrants canceled | (11,782,859) | |
Warrants expired | (2,500,000) | |
Warrants outstanding, ending | 16,534,030 | 16,284,030 |
Vested and Exercisable | 16,534,030 | |
Range of Warrant Price Per Share | ||
Warrant price granted | $ 0.03 | $ 0.05 |
Weighted Average Exercise Price | ||
Warrant exercise price, beginning | 0.49 | 0.85 |
Warrants granted | 0.03 | 0.05 |
Warrant exercise price, ending | $ 0.49 | $ 0.49 |
Weighted Average Remaining Contractual Life | ||
Wararnt term, beginning | 4 years 10 months 25 days | 4 years 7 months 6 days |
Warrant term, granted | 9 years 4 months 24 days | 9 years 2 months 12 days |
Warrant term, ending | 4 years 4 months 24 days | 4 years 4 months 24 days |
Lower Range [Member] | ||
Range of Warrant Price Per Share | ||
Warrant price, beginning | $ 0.05 | $ 0.33 |
Warrant price granted | ||
Warrant price, ending | 0.03 | 0.05 |
Upper Range [Member] | ||
Range of Warrant Price Per Share | ||
Warrant price, beginning | 1.10 | 1.65 |
Warrant price, ending | $ 1.10 | $ 1.10 |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number Options | ||
Stock Options Outstanding, Beginning | 21,700,293 | 22,660,459 |
Expired | (1,106,334) | (711,835) |
Canceled | (69,167) | (248,331) |
Stock Options Outstanding, Ending | 20,524,792 | 21,700,293 |
Stock Options, vested and exercisable | 18,087,789 | |
Weighted Average Exercise Price | ||
Stock Options Outstanding, Beginning | $ 0.26 | $ 0.27 |
Stock Options Outstanding, Ending | 0.25 | $ 0.26 |
Stock Options, vested and exercisable | $ 0.27 | |
Weighted Average Remaining Contractual Life | ||
Stock Options Outstanding, Beginning | 6 years 3 months 18 days | 8 years 1 month 6 days |
Stock Options Outstanding, Ending | 6 years | 7 years 1 month 6 days |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 1 Months Ended | |||||
Sep. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | May 15, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Common stock, shares authorized | 500,000,000 | 300,000,000 | ||||
Common stock, shares issued | 139,380,748 | 139,380,748 | ||||
Common stock, shares outstanding | 139,380,748 | 139,380,748 | ||||
Director [Member] | ||||||
Number of warrants issued | 250,000 | |||||
Warrant exercise price (in dollars per share) | $ 0.03 | |||||
Fair value of the warrants | $ 4,000 | |||||
Warrant term | 10 years | |||||
Warrants [Member] | ||||||
Number of warrants expired | 11,782,859 | |||||
Number of warrants issued | 512,500 | |||||
Written off warrant | $ 2,500,000 |
STOCKHOLDERS' EQUITY (Details_2
STOCKHOLDERS' EQUITY (Details Narrative 1) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 07, 2016 | Feb. 25, 2015 | Sep. 30, 2009 | Dec. 03, 2007 | |
Options outstanding | 20,524,792 | 21,700,293 | 22,660,459 | ||||
Share-based compensation expense | $ 196,000 | $ 263,000 | |||||
Unrecognized estimated compensation expense | $ 70,000 | ||||||
Period for recognization of unrecognized compensation expense | 1 year | ||||||
2007 Stock Incentive Plan [Member] | |||||||
Shares reserved for option under the plan | 8,000,000 | ||||||
Vesting period | 3 years | ||||||
Expiration period | 10 years | ||||||
Options granted | 8,000,000 | ||||||
Options outstanding | 0 | ||||||
2009 Stock Incentive Plan [Member] | |||||||
Shares reserved for option under the plan | 10,000,000 | ||||||
Vesting period | 3 years | ||||||
Expiration period | 10 years | ||||||
Options granted | 10,000,000 | ||||||
Options outstanding | 4,979,426 | ||||||
2015 Option Plan [Member] | |||||||
Shares reserved for option under the plan | 5,000,000 | ||||||
Vesting period | 3 years | ||||||
Expiration period | 10 years | ||||||
Options granted | 5,000,000 | ||||||
Options outstanding | 3,986,000 | ||||||
2016 Option Plan [Member] | |||||||
Shares reserved for option under the plan | 20,000,000 | ||||||
Vesting period | 3 years | ||||||
Expiration period | 10 years | ||||||
Options granted | 12,262,034 | ||||||
Options outstanding | 11,559,367 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax reconciliation | ||
Expected income tax benefit at statutory rate | $ (2,969,493) | $ (3,374,011) |
Debt discount amortization | 683,911 | 552,382 |
Permanently disallowed interest | 223,586 | 293,975 |
Other permanent differences | 10,264 | 13,359 |
Deferred pool true-ups/corrections related to: | ||
Other | 65,226 | (57,073) |
Change in valuation account | 1,986,506 | 2,571,368 |
Income tax expense (benefit) | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets: | ||
Tax benefit of net operating loss carry-forward | $ 18,162,329 | $ 17,794,637 |
Accrued interest | 7,538,930 | 6,142,738 |
Stock based compensation | 1,265,290 | 1,224,202 |
Amortization of intangible assets | 100,550 | 147,604 |
Depreciation of property and equipment | 393,935 | 390,632 |
Accrued expenses and other liabilities | 60,192 | 73,920 |
Research and development credit carry-forward | 29,084 | 29,084 |
Donations | 5,947 | 6,052 |
Asset reserve | 237,527 | |
Bad debt allowance | 1,591 | |
Beneficial conversion feature debt discount | (1,840,060) | (1,840,060) |
Total deferred tax assets | 25,955,315 | 23,968,809 |
Valuation allowance for deferred tax assets | (25,955,315) | (23,968,809) |
Deferred tax assets, net of valuation allowance | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Loss Carryforwards [Line Items] | ||
Statutory federal tax rate (in percent) | 21.00% | 21.00% |
Increase in deferred tax valuation allowance | $ 1,986,506 | $ 2,571,368 |
Federal [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 86,500,000 | |
Expiration of net operating tax loss carry-forward | Dec. 31, 2029 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 19,600,000 | |
Expiration of net operating tax loss carry-forward | Dec. 31, 2029 |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid equipment | $ 102,215 | $ 1,394,044 |
Other prepaid expenses | 109,185 | |
Other current assets | 9,064 | 14,382 |
TOTAL OTHER CURRENT ASSETS | $ 220,464 | $ 1,408,426 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 13,151,936 | $ 13,094,116 |
Less: accumulated depreciation | (11,173,916) | (10,607,450) |
Property and equipment, net | 1,978,020 | 2,486,666 |
Network Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 12,424,248 | 12,302,328 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 207,608 | 293,709 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 217,004 | 217,004 |
Test Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 197,090 | 175,603 |
Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 91,341 | 90,827 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 9,524 | 9,524 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,121 | $ 5,121 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 666,387 | $ 1,234,582 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 1,134,380 | $ 995,657 |
Accumulated Amortization | 303,698 | 249,517 |
Net | 830,682 | 746,140 |
Patents and Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,070,871 | 932,149 |
Accumulated Amortization | 243,702 | 192,995 |
Net | 827,169 | 739,154 |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 63,509 | 63,508 |
Accumulated Amortization | 59,996 | 56,522 |
Net | $ 3,513 | $ 6,986 |
OTHER ASSETS (Details 1)
OTHER ASSETS (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Cost | $ 1,584,279 | $ 2,106,537 |
Accumulated Amortization | 1,343,579 | 1,795,945 |
Net | 240,700 | 310,592 |
Deferred Installation Costs [Member] | ||
Cost | 1,288,156 | 1,810,414 |
Accumulated Amortization | 1,206,968 | 1,675,728 |
Net | 81,188 | 134,686 |
Prepaid License Fee [Member] | ||
Cost | 249,999 | 249,999 |
Accumulated Amortization | 136,611 | 120,217 |
Net | 113,388 | 129,782 |
Security Deposit [Member] | ||
Cost | 46,124 | 46,124 |
Net | $ 46,124 | $ 46,124 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
OTHER CURRENT LIABILITIES: | ||
Accrued interest | $ 3,751,061 | $ 750,548 |
Allowance for system removal | 152,800 | 236,650 |
Accrued paid time off | 112,176 | 129,773 |
Deferred commission | 139,041 | 117,206 |
Accrued rent expense | 22,161 | 68,780 |
Deferred revenue | 255,398 | 58,559 |
Accrued taxes | 29,309 | 23,156 |
Insurance Premium Financing | 19,360 | |
Other accrued liabilities | 24,199 | 31,568 |
TOTAL OTHER CURRENT LIABILITIES | $ 4,505,505 | $ 1,416,240 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2019USD ($) | |
Future debt payments for the year ending December 31, | ||
2020 | $ 20,563,786 | |
2021 | 45,966,949 | |
2022 | 10,643,186 | |
Thereafter | 24,919,513 | |
Total | 102,093,434 | |
Note Payable [Member] | ||
Future debt payments for the year ending December 31, | ||
2020 | 20,563,786 | |
Total | 20,563,786 | |
Senior Secured Convertible Notes [Member] | ||
Future debt payments for the year ending December 31, | ||
Thereafter | 24,919,513 | [1] |
Total | 24,919,513 | [1] |
Notes Payable [Member] | ||
Future debt payments for the year ending December 31, | ||
2021 | 45,966,949 | |
2022 | 10,643,186 | |
Total | $ 56,610,135 | |
[1] | Senior Secured Convertible Notes are included on the accompanying consolidated financial statements as $20,599,475, which represents this amount less debt discount of $4,320,038. |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 08, 2009ft² | |
Commitments and Contingencies Disclosure [Abstract] | |||
Area of office and warehouse space | ft² | 10,578 | ||
Rent expense | $ 263,664 | $ 233,497 | |
Monthly rent | 15,968 | ||
Future minimum payments | 95,810 | ||
Senior secured convertible notes, net | 20,599,475 | 17,481,632 | |
Senior secured convertible notes, debt discount | 4,320,038 | 4,714,453 | |
Senior secured notes, net | 50,835,220 | 46,892,974 | |
Senior secured notes, debt discount | $ 5,774,915 | $ 9,717,161 |
AGREEMENT WITH PDL BIOPHARMA,_2
AGREEMENT WITH PDL BIOPHARMA, INC. (Details Narrative) - USD ($) | Dec. 31, 2019 | May 15, 2019 | Apr. 29, 2019 | Mar. 29, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Jun. 26, 2015 | Feb. 28, 2018 | Jan. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | May 13, 2019 | Apr. 09, 2019 | Feb. 23, 2018 | Dec. 28, 2017 | Oct. 07, 2015 |
Restricted cash | $ 0 | $ 750,000 | $ 0 | $ 750,000 | |||||||||||||
Interest Expense | 10,851,162 | 12,452,113 | |||||||||||||||
PDL Modification Agreement [Member] | |||||||||||||||||
Reduction in monthly operating expenses | $ 148,000 | $ 113,000 | $ 167,000 | ||||||||||||||
Interest Expense | 3,773,673 | $ 1,015,044 | |||||||||||||||
Deferred issuance costs | 0 | 0 | |||||||||||||||
Directors And Officers [Member] | |||||||||||||||||
Warrant exercise price (in dollars per share) | $ 0.05 | ||||||||||||||||
Tranche One Term Note [Member] | |||||||||||||||||
Principal payments | 1,666,667 | ||||||||||||||||
Note amount | $ 20,000,000 | ||||||||||||||||
PDL Credit Agreement - Tranche One Debt [Member] | |||||||||||||||||
Amount available under credit agreement | $ 20,000,000 | ||||||||||||||||
Interest rate | 13.50% | ||||||||||||||||
Fourteenth Amendment ToThe PDL Modification Agreement [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | $ 750,000 | ||||||||||||||||
Note amount | $ 20,000,000 | ||||||||||||||||
Fourteenth Amendment ToThe PDL Modification Agreement [Member] | On or prior to February 23, 2018 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | 2,050,000 | ||||||||||||||||
Fourteenth Amendment ToThe PDL Modification Agreement [Member] | On or prior to Feb. 28, 2019 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | 750,000 | ||||||||||||||||
Fourteenth Amendment ToThe PDL Modification Agreement [Member] | On or prior to May 15, 2019 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | 3,300,000 | ||||||||||||||||
Fourteenth Amendment ToThe PDL Modification Agreement [Member] | On or prior to May 15, 2019 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | 250,000 | ||||||||||||||||
Fourteenth Amendment ToThe PDL Modification Agreement [Member] | On or prior to July 13, 2018 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | $ 1,000,000 | ||||||||||||||||
Fifth PDL Credit Agreement Amendment [Member] | |||||||||||||||||
Interest rate | 15.50% | ||||||||||||||||
Fifth PDL Credit Agreement Amendment [Member] | Tranche One Term Note [Member] | |||||||||||||||||
Warrant exercise price (in dollars per share) | $ 0.03 | ||||||||||||||||
Interest rate | 15.50% | ||||||||||||||||
Maturity date | Oct. 7, 2020 | ||||||||||||||||
Note amount | $ 200,000 | ||||||||||||||||
Issuance of warrants | 250,000 | ||||||||||||||||
Fifth PDL Credit Agreement Amendment [Member] | Tranche Three Loans Term Note [Member] | |||||||||||||||||
Note amount | $ 200,000 | ||||||||||||||||
Fifth PDL Credit Agreement Amendment [Member] | Tranche Three Loans Term Note [Member] | Dr. Higgins [Member] | |||||||||||||||||
Note amount | 50,000 | ||||||||||||||||
Fifth PDL Credit Agreement Amendment [Member] | Tranche Three Loans Term Note [Member] | Mr. Johnson [Member] | |||||||||||||||||
Note amount | $ 150,000 | ||||||||||||||||
Fifth PDL Credit Agreement Amendment [Member] | Tranche One Loan Term Note [Member] | |||||||||||||||||
Interest rate | 13.50% | ||||||||||||||||
Thirteen Amendment PDL Modification Agreement [Member] | Debt Instrument, Redemption, Period Four [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | $ 3,550,000 | ||||||||||||||||
Twelfth Amendment PDL Modification Agreement [Member] | May 15, 2019 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | $ 750,000 | ||||||||||||||||
Eleventh Amendment PDL Modification Agreement [Member] | July 13, 2018 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | $ 750,000 | ||||||||||||||||
Tenth Amendment PDL Modification Agreement [Member] | February 23, 2018 [Member] | |||||||||||||||||
Net cash proceeds for issuance capital stock or debt | $ 2,050,000 | ||||||||||||||||
PDL Credit Agreement [Member] | |||||||||||||||||
Amount available under credit agreement | 40,000,000 | ||||||||||||||||
Interest only quarterly payments | $ 675,000 | ||||||||||||||||
Deferred financing costs | $ 815,062 | 815,062 | |||||||||||||||
Purchase Agreement Warrants [Member] | PDL Credit Agreement [Member] | |||||||||||||||||
Warrants granted (shares) | 4,444,445 | ||||||||||||||||
Warrant exercise price (in dollars per share) | $ 0.45 | $ 0.40 | |||||||||||||||
Deferred issuance costs | $ 1,257,778 | ||||||||||||||||
Deferred financing costs | $ 44,445 | ||||||||||||||||
Warrants [Member] | Fifth PDL Modification Agreement [Member] | Tranche Three Lenders Term Note [Member] | |||||||||||||||||
Interest Expense | $ 3,704 | ||||||||||||||||
Lower Range [Member] | Fourteenth PDL Modification Agreement [Member] | |||||||||||||||||
Minimum cash balance required under existing loan documents | $ 0 | ||||||||||||||||
Upper Range [Member] | Fourteenth PDL Modification Agreement [Member] | |||||||||||||||||
Minimum cash balance required under existing loan documents | $ 750,000 |
AGREEMENT WITH HEALTHCOR (Detai
AGREEMENT WITH HEALTHCOR (Details Narrative) - USD ($) | Jul. 13, 2018 | Feb. 23, 2018 | Sep. 30, 2015 | Dec. 04, 2014 | Jan. 31, 2012 | Apr. 21, 2011 |
HealthCor Purchase Agreement [Member] | 2011 Senior Secured Convertible Note#1 [Member] | ||||||
Note amount | $ 9,316,000 | |||||
Debt Maturity Date | Apr. 20, 2021 | |||||
Issuance of warrants | 5,488,456 | |||||
Exercise price of warrants | $ 1.40 | |||||
HealthCor Purchase Agreement [Member] | 2011 Senior Secured Convertible Note#2 [Member] | ||||||
Note amount | $ 10,684,000 | |||||
Debt Maturity Date | Apr. 20, 2021 | |||||
Issuance of warrants | 6,294,403 | |||||
Exercise price of warrants | $ 1.40 | |||||
HealthCor Purchase Agreement [Member] | 2011 Senior Secured Convertible Notes [Member] | ||||||
Increase in interest rate (per annum) should default occur | 5.00% | |||||
HealthCor Purchase Agreement [Member] | 2011 Senior Secured Convertible Notes [Member] | First Five Year Note Period [Member] | ||||||
Interest rate, provided no default | 12.50% | |||||
HealthCor Purchase Agreement [Member] | 2011 Senior Secured Convertible Notes [Member] | Second Five Year Note Period [Member] | ||||||
Interest rate, provided no default | 10.00% | |||||
HealthCor Second Amendment Purchase Agreement [Member] | 2012 Senior Secured Convertible Note#1 [Member] | ||||||
Note amount | $ 2,329,000 | |||||
Debt Maturity Date | Jan. 30, 2022 | |||||
HealthCor Second Amendment Purchase Agreement [Member] | 2012 Senior Secured Convertible Note#2 [Member] | ||||||
Note amount | $ 2,671,000 | |||||
Debt Maturity Date | Jan. 30, 2022 | |||||
HealthCor Second Amendment Purchase Agreement [Member] | 2012 Senior Secured Convertible Notes [Member] | ||||||
Debt conversion price | $ 1.25 | |||||
HealthCor Tenth Amendment to Purchase Agreement [Member] | ||||||
Note amount | $ 1,000,000 | |||||
Debt Maturity Date | Jul. 12, 2028 | |||||
Debt conversion price | $ 0.05 | |||||
HealthCor Eighth Amendment Purchase Agreement [Member] | ||||||
Note amount | $ 2,050,000 | |||||
Debt Maturity Date | Feb. 22, 2028 | |||||
Issuance of warrants | 512,500 | |||||
Exercise price of warrants | $ 0.05 | |||||
Debt conversion price | $ 0.05 | |||||
HealthCor Ninth Amendment Purchase Agreement [Member] | ||||||
Debt Maturity Date | Mar. 31, 2025 | |||||
Issuance of warrants | 1,000,000 | |||||
Exercise price of warrants | $ 0.53 | |||||
HealthCor Fifth Amendment Purchase Agreement [Member] | ||||||
Note amount | $ 6,000,000 | |||||
Debt Maturity Date | Feb. 16, 2025 | |||||
Issuance of warrants | 3,692,308 | |||||
Exercise price of warrants | $ 0.52 | |||||
Debt conversion price | $ 0.52 |
AGREEMENT WITH HEALTHCOR (Det_2
AGREEMENT WITH HEALTHCOR (Details Narrative 1) | May 15, 2019USD ($)$ / shares | Jul. 13, 2018USD ($)$ / shares | Jul. 10, 2018USD ($) | Feb. 23, 2018USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Dec. 04, 2014USD ($)$ / sharesshares | Jan. 16, 2014USD ($)$ / sharesshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($) | Aug. 20, 2013USD ($) |
Beneficial conversion features for senior secured convertible notes | $ 6,392 | $ 133,220 | ||||||||
Debt discount | 5,774,915 | 9,717,161 | ||||||||
Interest Expense | 10,851,162 | 12,452,113 | ||||||||
Paid in kind interest | 2,673,428 | 5,197,408 | ||||||||
Deferred debt costs | 0 | 815,062 | ||||||||
HealthCor Purchase Agreement [Member] | ||||||||||
Beneficial conversion features for senior secured convertible notes | 6,390 | 133,220 | ||||||||
Interest Expense | 4,413,123 | 3,776,287 | ||||||||
Paid in kind interest | $ 1,178,322 | 3,979,983 | ||||||||
HealthCor Twelfth Amendment Purchase Agreement [Member] | 2019 Investor [Member] | ||||||||||
Note amount | $ 50,000 | |||||||||
Debt Maturity Date | May 15, 2029 | |||||||||
Debt conversion price | $ / shares | $ 0.03 | |||||||||
HealthCor Twelfth Amendment Purchase Agreement [Member] | Common Stock [Member] | 2019 Investor [Member] | ||||||||||
Number of shares the note may be converted into | shares | 56,000 | |||||||||
HealthCor Tenth Amendment to Purchase Agreement [Member] | ||||||||||
Note amount | $ 1,000,000 | |||||||||
Debt Maturity Date | Jul. 12, 2028 | |||||||||
Debt conversion price | $ / shares | $ 0.05 | |||||||||
HealthCor Ninth Amedment Purchase Agreement [Member] | ||||||||||
Net proceeds to be retained from sale of hospital assets | $ 5,000,000 | |||||||||
Cash proceeds of working capital stock and debt | $ 5,000,000 | |||||||||
HealthCor Ninth Amedment Purchase Agreement [Member] | Common Stock [Member] | ||||||||||
Conversion of notes | 1.20 | |||||||||
HealthCor Ninth Amedment Purchase Agreement [Member] | Warrants [Member] | ||||||||||
Conversion of notes | 1 | |||||||||
HealthCor Eighth Amendment Purchase Agreement [Member] | ||||||||||
Note amount | $ 2,050,000 | |||||||||
Debt Maturity Date | Feb. 22, 2028 | |||||||||
Issuance of warrants | shares | 512,500 | |||||||||
Exercise price of warrants | $ / shares | $ 0.05 | |||||||||
Debt conversion price | $ / shares | $ 0.05 | |||||||||
Interest Expense | 10,707 | |||||||||
HealthCor Eighth Amendment Purchase Agreement [Member] | New Investors [Member] | ||||||||||
Number of shares the note may be converted into | shares | 51,400,000 | |||||||||
HealthCor Ninth Amendment Purchase Agreement [Member] | ||||||||||
Debt Maturity Date | Mar. 31, 2025 | |||||||||
Issuance of warrants | shares | 1,000,000 | |||||||||
Exercise price of warrants | $ / shares | $ 0.53 | |||||||||
Minimum cash balance required under existing loan documents | $ 5,000,000 | |||||||||
Debt discount | 378,000 | |||||||||
Interest Expense | $ 57,803 | 57,803 | ||||||||
HealthCor Ninth Amendment Purchase Agreement [Member] | Lower Range [Member] | ||||||||||
Minimum cash balance required under existing loan documents | $ 2,000,000 | |||||||||
HealthCor Fifth Amendment Purchase Agreement [Member] | ||||||||||
Note amount | $ 6,000,000 | |||||||||
Debt Maturity Date | Feb. 16, 2025 | |||||||||
Issuance of warrants | shares | 3,692,308 | |||||||||
Exercise price of warrants | $ / shares | $ 0.52 | |||||||||
Debt conversion price | $ / shares | $ 0.52 | |||||||||
Debt discount | $ 1,093,105 | |||||||||
Interest Expense | $ 34,672 | $ 29,239 | ||||||||
HealthCor Fifth Amendment Purchase Agreement [Member] | New Investors [Member] | ||||||||||
Number of shares the note may be converted into | shares | 17,500,000 | |||||||||
HealthCor Fifth Amendment Purchase Agreement [Member] | HealthCor Partners Fund [Member] | ||||||||||
Number of shares the note may be converted into | shares | 3,500,000 | |||||||||
HealthCor Fourth Amendment Purchase Agreement [Member] | 2014 Senior Secured Convertible Note#1 [Member] | ||||||||||
Note amount | $ 2,329,000 | |||||||||
Minimum cash balance required under existing loan documents | 5,000,000 | |||||||||
HealthCor Fourth Amendment Purchase Agreement [Member] | 2014 Senior Secured Convertible Note#2 [Member] | ||||||||||
Note amount | $ 2,671,000 | |||||||||
HealthCor Fourth Amendment Purchase Agreement [Member] | 2014 Senior Secured Convertible Notes [Member] | ||||||||||
Issuance of warrants | shares | 4,000,000 | |||||||||
Exercise price of warrants | $ / shares | $ 0.40 | |||||||||
Debt conversion price | $ / shares | $ 0.40 | |||||||||
Number of shares the note may be converted into | shares | 25,400,000 | |||||||||
HealthCor Third Amendment Purchase Agreement [Member] | ||||||||||
Minimum cash balance required under existing loan documents | $ 5,000,000 | |||||||||
HealthCor Third Amendment Purchase Agreement [Member] | Lower Range [Member] | ||||||||||
Minimum cash balance required under existing loan documents | 4,000,000 | |||||||||
HealthCor Third Amendment Purchase Agreement [Member] | Upper Range [Member] | ||||||||||
Minimum cash balance required under existing loan documents | $ 5,000,000 | |||||||||
HealthCor Tenth Amedment Purchase Agreement [Member] | Common Stock [Member] | 2018 Investor [Member] | ||||||||||
Number of shares the note may be converted into | shares | 24,000,000 |
JOINT VENTURE AGREEMENT (Detail
JOINT VENTURE AGREEMENT (Details Narrative) - Joint Venture - Rockwell [Member] - USD ($) | Feb. 02, 2018 | Jan. 31, 2018 | Jan. 31, 2018 | Jan. 31, 2017 | Nov. 16, 2010 | Dec. 31, 2019 |
Total cost to acquire remaining interest in joint venture | $ 1,213,786 | |||||
Promissory note issued to acquire interest in joint venture | 1,113,786 | |||||
Cash payment to acquire remaining interest in joint venture | $ 100,000 | |||||
Balloon payment to be paid | $ 13,786 | |||||
PDL Modification Agreement [Member] | ||||||
Cash payment to acquire remaining interest in joint venture | $ 50,000 | |||||
Increase fair value of warrant | $ 13,814 | |||||
Exercise price of warrants | $ 0.52 | |||||
Changes in exercise price of warrants | $ 0.05 | |||||
Warrants [Member] | ||||||
Warrants issued for financing costs, warrants | 1,151,206 | |||||
Fair value of warrants issued to Rockwell for providing funding | $ 1,124,728 | |||||
Fair value adjustment of warrants | $ 11,512 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Mar. 04, 2020 | Feb. 06, 2020 | Jan. 28, 2020 | Mar. 27, 2020 | May 15, 2019 |
Dr. Higgins [Member] | |||||
Number of warrants issued | 250,000 | ||||
Warrant exercise price (in dollars per share) | $ 0.03 | ||||
Subsequent Event [Member] | |||||
CARES Act | $ 2,000,000,000,000 | ||||
Subsequent Event [Member] | Fourth Amendment to Commercial Lease Agreement [Member] | |||||
Lease extended date | Aug. 31, 2025 | ||||
Operating lease, renewal term | 5 years | ||||
Subsequent Event [Member] | Nineteenth Amendment To Modification Agreement [Member] | On or Prior to February 11, 2020 [Member] | |||||
Net cash proceeds for issuance capital stock or debt | $ 600,000 | ||||
Subsequent Event [Member] | Sixth Credit Agreement Amendment [Member] | Tranche Three Loan [Member] | Tranche Three Lenders [Member] | |||||
Principal amount | $ 500,000 | ||||
Interest rate | 15.50% | ||||
Maturity date | Oct. 7, 2020 | ||||
Subsequent Event [Member] | Sixth Credit Agreement Amendment [Member] | Additional Tranche Three Loan [Member] | Tranche Three Lenders [Member] | |||||
Principal amount | $ 500,000 | ||||
Subsequent Event [Member] | Sixth Credit Agreement Amendment [Member] | Additional Tranche Three Loan [Member] | Tranche Three Lenders [Member] | Mr. Johnson [Member] | |||||
Principal amount | 250,000 | ||||
Subsequent Event [Member] | Sixth Credit Agreement Amendment [Member] | Additional Tranche Three Loan [Member] | Tranche Three Lenders [Member] | Dr. Higgins [Member] | |||||
Principal amount | $ 250,000 | ||||
Subsequent Event [Member] | Sixth Credit Agreement Amendment [Member] | Additional Tranche Three Loan [Member] | Tranche Three Lenders [Member] | Dr. Higgins [Member] | Warrant [Member] | |||||
Number of warrants issued | 1,000,000 | ||||
Warrant exercise price (in dollars per share) | $ 0.01 | ||||
Warrant, expiration date | Feb. 6, 2030 | ||||
Subsequent Event [Member] | Thirteenth Amendment to Note and Warrant Purchase Agreement [Member] | |||||
Principal amount | $ 100,000 | ||||
Maturity date | Feb. 5, 2030 | ||||
Proceeds for debt | $ 100,000 | ||||
Debt conversion price ( in dollars per share) | $ 0.01 |